Uptrend forecast for local bourse next year

PETALING JAYA: Bursa Malaysia is likely to edge higher in 2026, underpinned by a resilient domestic economy which will support corporate earnings prospects along with stocks priced at undemanding valuations.

MBSB Research noted the local market could also be aided by pent-up buying from the inflow of foreign funds, which have been net sellers year-to-date to the tune of RM20bil.

The return of foreign funds in 2026 will be partly driven by US rate cuts and strengthening of the ringgit, it stated.

MBSB Research noted key themes for 2026 include greater clarity that has emerged as most uncertainties experienced in 2025 have been largely cleared.

“Businesses can move on from the US tariff issues and should the US Supreme Court rule against the tariff, we believe it will be an upside surprise,” it noted in its 2026 Market Outlook report.

The research house added artificial intelligence (AI) driven investments will likely continue at pace in 2026 as the US Federal Reserve (Fed) undertakes its monetary easing cycle.

“Visit Malaysia Year 2026 (VMY2026) will be a key theme for Malaysia’s economy and equities market in 2026.

“It will also be a busy year for renewable energy or RE,” it forecast.

The research house’s baseline target for the benchmark FBM KLCI in 2026 is at 1,750 points or a price earnings (PE) multiple of 15.2 times.

Maybank Investment Bank Research (Maybank IB) also has a bullish view on Bursa Malaysia, stating the country is entering 2026 with firmer consumption spending and sustained investment activity, supported by a resilient macro outlook and a more constructive equity market backdrop.

It added US president Donald Trump’s Liberation Day tariffs’ effect has been “benign” and a sustained AI-led tech upcycle as well as monetary policy easing cycle mitigates downside risk to global growth.

The research house has set a 2026 year-end target of 1,730 points (15 times financial year 2027 PE) for the FBM KLCI.

From a sector pick angle, Maybank IB’s preference remains for domestic-centric sectors led by banks, consumer, construction, healthcare and RE.

While momentum for the construction sector persists, it believes benefits would increasingly shift to the mechanical and electrical players.

“We expect 2026 to be pulsed with a clearer sense of direction and a stronger push to deliver on long-promised reforms.

“Project rollouts are gathering momentum while businesses are revving up capital expenditure and households are benefitting from steadier wages with improved sentiment.

“Taken together, these shifts create a backdrop that is more constructive,” Maybank IB said in its own Malaysia 2026 Outlook & Lookouts report.

MBSB Research added with VMY2026 aiming to attract 47 million visitors and generate RM329bil in tourism receipts, sectors to benefit include transportation companies like airlines, airports, mass transit operators; hospitality players like hotels, resorts, real estate investment trusts (REITs), as well as consumer-related companies in the food and beverage space, retailers and convenience store operators.

Maybank IB sees five key themes for 2026 that reflect policy deliveries and capital allocation, led by infrastructure-driven growth, continued energy transition framework, resilient consumer spending and healthcare demand, sustained state-driven development corridors, tech recovery and digital initiatives, with banks being the overarching thematic as the financing backbone for these activities.

“We believe these themes sit firmly within the government’s long-term plans, offering a multi-year investment roadmap with visibility clearer than before,” the bank stated.

It added the combination of resilient growth, and a low and stable inflation rate will allow Bank Negara Malaysia the space to hold the overnight policy rate at 2.75% throughout 2026.

MBSB Research noted in terms of sectoral performance in 2025, plantation, REITs and construction have been the best performing sectors year-to-date, as these were the only sectors that are seeing positive returns thus far.

It also expects the ringgit to strengthen further in 2026 with its movement dictated by the shift in the global financial market dynamics and cross-border capital movements.

Malaysia’s positive economic fundamentals and current account surplus will support the appreciation of the local currency, but MBSB Research warned the local unit remains sensitive to significant external uncertainties, including the potential for new tariff measures, greater trade fragmentation and sustained geopolitical tensions.

MBSB Research expects the local unit to average RM4 to the US dollar in 2026 with a target of RM3.95 by the end of 2026.