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Market Highlights
Local Market Strategy
Sat, 10 Oct 2026 02:19 am
Market Strategy: Budget 2027 - Wage Reset, Fiscal Path Intact

Budget Highlights
Fiscal Path Intact. Budget 2027 is the fifth MADANI Budget and the second under the 13th Malaysia Plan (13MP), tabled under the theme “Reaching for the Skies, While Anchored on Our Values”. The headline fiscal numbers were broadly in line with our preview. The government targets a narrower fiscal deficit of 3.3% of GDP in 2027, matching our forecast, from a revised 3.6% in 2026E (original target: 3.5%), keeping it on course for 3.0% by 2028. Federal development expenditure (DE) was set at RM83.0bn (+2.5% vs RM81.0bn in 2026E), marginally above our RM82.4bn forecast.

Local Market Strategy
Wed, 07 Oct 2026 07:17 am
Market Strategy - Budget 2027 Preview: Supportive, Not Transformational

• Budget 2027 should be mildly expansionary, but not a broad-based fiscal stimulus. The focus is likely to remain on targeted household support, fiscal discipline and productivity-enhancing investment.
• Fiscal consolidation remains intact, with our 2027 fiscal deficit forecast at 3.3% of GDP, keeping the Government on track towards its medium-term 3.0% target by 2028.
• Gross development expenditure is expected to rise modestly to RM82.4bn. For construction, the key opportunity is execution of the existing infrastructure pipeline rather than a fresh mega-project cycle.
• AI, semiconductors and data-centre infrastructure remain the strongest structural-growth themes. Budget 2027 should reinforce an investment cycle that is already underway rather than initiate it.
• Energy transition is increasingly linked to the data-centre boom. Grid investment, storage, LSS6 and CRESS should remain key policy and earnings catalysts.
• Household support through STR/SARA and housing measures should cushion domestic demand, but minimum-wage increases, subsidy rationalisation and selected tax measures could offset part of the benefit.
• Maintain our end-2026 FBM KLCI target at 1,770. We favour a barbell strategy, combining earnings-resilient companies with structural-growth and selective small-cap alpha opportunities.

Economic Update
Tue, 06 Oct 2026 07:04 am
Economic outlook - Penang tech visit: Stronger conviction on Malaysia’s tech outlook        

• We visited five companies across Penang covering engineering & support services, equipment distribution & manufacturing, raw & semi-finished materials, Automated Test Equipment and precision machining & components.
• The current AI upcycle appears structural, while we noted evidence of trade diversion and talent shortages, and identified constraints to Malaysia moving up the value chain.
• Malaysia’s concentration in lower-value segments of the semiconductor value chain could limit its ability to fully capture the broader tech upcycle dividend.
• The National Semiconductor Strategy (NSS) and initiatives such as the Malaysia Advanced Packaging Consortium (MAPC) could help address these constraints.

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