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Market Highlights
Economic Update
Tue, 24 Mar 2026 07:40 am
Malaysia Inflation Rate - Inflation upside raises prospect of BNM hike    

Malaysia’s headline inflation moderated to +1.4% YoY in February (Jan: +1.6%), slightly below consensus of +1.6%, driven mainly by easing food prices.

Core inflation printed +2.0% YoY (Jan: +2.3%), slightly below its 2021–2025 average of +2.1%. Domestic demand should remain the key growth anchor in 2026, in our view.

Rising geopolitical tensions in the Middle East pose upside risks to the inflation outlook, with the main risk stemming from adjustments to domestic fuel prices.

Using the Russia-Ukraine conflict in 2022 as a reference, assuming Brent averages USD101/bbl through year-end and subsidised RON95 rises to RM2.40/litre or higher, headline inflation could exceed 3.0%, raising the prospect of a BNM rate hike.

Nonetheless, we believe BNM will remain cautious, as monetary tightening may not be ideal in a cost-push inflation environment.

An upward revision to our inflation forecast looks increasingly likely if fuel prices remain elevated. For now, we maintain our 2026 inflation forecast at +1.8%.

Economic Update
Tue, 24 Mar 2026 07:38 am
Malaysia External Trade - Trade outlook intact despite rising external risks

Exports remained resilient at +10.8% YoY in February (Jan: +19.6%), slightly below consensus, while imports rose to +8.2% (Jan: +4.8%). The trade surplus narrowed to RM16.7bn (Jan: RM22.0bn).

Manufacturing exports slowed (+12.8% YoY; Jan: +22.3%), but E&E continued to record strong double-digit growth, while commodity exports remained weak.

On a 3-month moving average (3mma) basis, capital goods imports fell (-8.4% YoY; Jan: +2.2%) for the first time in over two years, warranting close monitoring in our view.

Key external risks include US trade policy uncertainty and escalating geopolitical tensions in the Middle East. The direct impact of the Middle East conflict on Malaysia should be limited given our relatively small trade exposure to the region.

We maintain our 2026 export growth forecast at +4.8% YoY (2025: +6.4%) for now, pending greater clarity on tariff policies and developments in the Middle East conflict.

Economic Update
Thu, 19 Mar 2026 07:32 am
US FOMC Meeting - Prolonged pause amid fluid global dynamics

• The Fed kept the policy rate at 3.50-3.75%, with Governor Stephen Miran dissenting in favour of a 25-bp cut.
• The dot plot points to only one 25-bp cut in 2026. No member expects a rate hike, while fewer members pencilled in multiple cuts.
• As inflation risks may take precedence over growth concerns, we now expect only one 25-bp Fed rate cut in 2026 (previously two cuts).
• Reduced rate-cut expectations and safe-haven demand should keep the USD supported. We expect USD/MYR to trade within 3.90-4.00 in the near term.
• We maintain our view that the OPR will remain at 2.75% through 2026, supported by a stable domestic inflation outlook.

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