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Market Highlights
Economic Update
Wed, 01 Apr 2026 07:42 am
BNM Economic & Monetary Review 2025 - Growth outlook subject to external risks

BNM projects Malaysia’s GDP to expand between 4.0-5.0% in 2026 (2025: +5.2%), broadly in line with our forecast of +4.7%. Downside risks stem from weaker global trade amid the Middle East conflict and tariff uncertainties, as well as softer commodity production.

BNM expects inflation to average 1.5-2.5% in 2026 (2025: +1.4%), with risks tilted to the upside, contingent on external developments and domestic fuel policy.

In assessing the policy path, BNM will monitor spillovers from elevated oil prices to business costs, the extent of pass-through to consumer prices, and domestic demand conditions.

Barring a sharp rise in inflation or a material deterioration in the growth outlook, we expect BNM to keep the OPR unchanged at 2.75% throughout 2026.

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.

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