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Market Highlights
Economic Update
Thu, 30 Oct 2025 07:39 am
US FOMC Meeting - Fed cuts 25 bps, ends QT in December

The Fed cut the policy rate by 25 bps to 3.75–4.00%, with Governor Stephen Miran dissenting in favour of a larger 50-bp cut, while Kansas City Fed President Jeffrey Schmid voted for no change.

Chair Powell stressed that a December rate cut is not conclusive, highlighting diverging views within the Committee on inflation and employment risks.

The Fed will conclude the reduction of its securities holdings on 1 December, citing tighter money market liquidity conditions, effectively marking an end to QT.

We expect the Fed to deliver another 25-bp cut in December, while maintaining a general easing bias into 2026.

UST yields should retain a mild downward bias, lending support to the ringgit. Given trade uncertainties, we maintain our projection that USDMYR will hover around 4.20 this year before strengthening modestly to 4.15 in 2026.

Economic Update
Thu, 23 Oct 2025 07:28 am
Malaysia Inflation Rate - Modest inflation supports key reforms

Headline inflation edged up to +1.5% YoY in September (Aug: +1.3%), slightly above consensus, partly driven by water tariff adjustments.

Core inflation rose to +2.1% YoY (Aug: +2.0%), signalling resilient domestic demand. Government’s cash aid has helped support household consumption momentum.

Implementation of reform measures such as water tariff adjustments in a low-inflation environment is timely, helping to contain near-term price risks.  

We expect headline inflation to stay steady in the remaining months, as lower fuel prices under the Budi95 scheme offset modest cost pass-through from other measures.

We maintain our 2025 and 2026 inflation forecasts at +1.4% YoY and +2.0% YoY, respectively. The projected uptick in 2026 reflects continued passthrough from fiscal and cost-reform measures, including SST expansion, minimum wage adjustments, insurance premium hikes, and utilities tariff rationalisation, alongside firm domestic demand.

Economic Update
Tue, 21 Oct 2025 07:22 am
Malaysia 3Q25 GDP Advance Estimate - GDP surprise defies tariff concerns

Malaysia’s economy expanded by +5.2% YoY in 3Q25 (2Q25: +4.4%), well above consensus of +4.2%. Growth was supported by rebounds in mining and firmer manufacturing, while services remained the main anchor of domestic momentum.

Despite the stronger 3Q25 print, questions remain over the sustainability of the recent export momentum, as renewed US-China trade tensions, the pending US court ruling on tariff legality, reciprocal tariffs and further sectoral tariffs could shift the trade outlook.

We expect export and manufacturing growth to moderate as the impact of tariffs gradually filters through into 2026, even as domestic demand remains supported by a resilient labour market and ongoing policy support. 

Given the robust year-to-date growth of +4.7% YoY, we have revised our 2025 GDP growth forecast upwards to +4.5% (previously +4.2%). For 2026, we maintain our projection at +4.1%, reflecting a softer external outlook and the anticipated base effect from this year’s stronger growth momentum.

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