Malaysian Market Review. The FBM KLCI rose 0.37% to 1,608.14 on Thursday, extending its gains for a third consecutive session and defying a broader regional sell-off, supported by buying interest in index heavyweights. However, market breadth turned negative, with 681 decliners outnumbering 420 gainers, while 501 counters were unchanged. Sector-wise, Energy (+1.29%), Transportation & Logistics (+0.83%) and Plantation (+0.49%) were the top gainers, while Technology (-1.85%), Healthcare (-0.64%) and Telecommunications & Media (-0.62%) were the top laggards.

Global Markets. Wall Street closed mixed on Thursday, as the Nasdaq Composite fell 2.60% to 26,008.86 and the S&P 500 declined 1.21% to 7,663.43, while the Dow Jones Industrial Average edged up 0.02% to 52,867.98. Technology stocks led the sell-off amid renewed concerns over the sustainability of AI spending, with AMD falling more than 8%, while Micron and Nvidia declined 6% and 4%, respectively. Meanwhile, escalating geopolitical tensions involving Iran drove Brent crude up 2.64% to US$112.92/bbl. U.S. Treasury yields fell, with the 10-year yield dropping below 5.00% to 4.97% as investors sought safe-haven assets. In Europe, the STOXX Europe 600 fell 1.05% amid broad-based selling. Asian markets also declined, with South Korea’s KOSPI falling 3.52%, Japan’s Nikkei 225 dropping 2.65% and Hong Kong’s Hang Seng Index retreating 3.03%, as AI-related concerns weighed on regional technology stocks (CNBC).

Market Outlook. We expect the FBM KLCI to trade lower today, tracking Wall Street’s sharp overnight pullback as renewed concerns over AI spending weighed on technology stocks and reversed Wednesday’s gains. Despite better-than-expected results, Meta and Tesla failed to reassure investors, as attention remained on rising capital expenditure for AI expansion and Tesla’s planned investments in AI and robotics. The renewed surge in oil prices further dampened sentiment. The Nasdaq Composite’s steepest single-day decline since June could weigh on local technology and semiconductor-related counters, which had recently staged a recovery. Investors will also be watching next week’s FOMC meeting for further clues on the interest rate outlook. Domestically, defensive and domestically driven counters may provide some support amid weaker external sentiment.

Sector focus. Technology stocks may remain under pressure amid concerns over AI spending, while Energy stocks could benefit from elevated oil prices amid Middle East tensions. Construction stocks may stay in focus on continued data centre-related project opportunities and potential contract wins.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI closed at 1,608.14, remaining below its key moving averages, indicating that the broader downtrend remains intact. Immediate resistance is seen at 1,610, followed by 1,630, while support lies at 1,600, with further downside towards 1,580 if selling pressure resumes. The index needs to break above near-term resistance to signal improving momentum, although the broader technical outlook remains cautious.

Company News

Zetrix AI Bhd said no payment default has occurred under its RM2bn sukuk programme despite the Oct 22 covenant breach deadline, with sukuk holders scheduled to meet on Oct 23 to discuss a resolution; failure to obtain a waiver could trigger RM2.16bn in principal and future coupon obligations. (The Edge)

RHB Bank Bhd secured an extension from Bank Negara Malaysia until Feb 11, 2027, to finalise negotiations with Tokio Marine on merging their Malaysian general insurance businesses, with RHB potentially retaining up to a 35% stake in the combined entity. (The Edge)

TSH Resources Bhd denied that its Indonesian plantation operations contributed to transboundary haze, stating that all 274 hotspots detected within its estate boundaries between Jan 1 and Oct 21 were in community enclave areas outside its planted and operational areas. (The Edge)

RedPlanet Bhd targets annual earnings growth of 10% to 20% over the next three to five years, supported by rising demand for utility grid upgrades and railway infrastructure amid data centre expansion and urban rail development. (The Edge)

Aizo Group Bhd saw its RM36.79m sewage system upgrading subcontract in Terengganu terminated after the project owner cancelled the main contract, with the main contractor reserving its rights to pursue claims for losses. (The Edge)

BMS Holdings Bhd terminated its proposed RM23.8m land acquisition in Cheras after failing to agree on the terms with the vendor, which has refunded the earnest deposit with no further claims from either party. (The Edge)

Harbour-Link Group Bhd agreed to acquire two container vessels for RM56.68m to expand its fleet and cater to growing regional demand for container transportation. (The Edge)

Jati Tinggi Group Bhd led a consortium that secured a RM568.2m contract from Tenaga Nasional for a transmission main intake substation in Paka, Terengganu, with Jati Tinggi’s 55% share worth RM312.51m and completion scheduled within two years. (The Edge)

Exsim Hospitality Bhd secured a RM13.49m subcontract from Binastra Corp for the supply, fabrication, delivery and installation of carpentry works, with completion scheduled for June 2028. (The Edge)

Pavilion Real Estate Investment Trust reported flat 3QFY26 net property income of RM145.58m, while distributable income fell 1.4% to RM96.47m, translating to a lower DPU of 2.45 sen compared with 2.49 sen a year ago. (The Edge)

Foodie Media Bhd reported FY2026 net profit up 67.7% to RM15.67m and revenue up 49.6% to RM55.49m, driven by stronger demand for digital content, influencer marketing and events; it declared total quarterly dividends of 1 sen per share, bringing FY2026 dividends to 1.53 sen per share. (The Edge)

Malaysian Market Review. The FBM KLCI rose 0.17% to 1,602.27 on Wednesday, extending its gains for a second consecutive session amid late buying interest. Market breadth turned positive, with 626 gainers outnumbering 416 decliners, while 502 counters were unchanged. Sector-wise, Technology (+2.84%), Construction (+1.64%) and Property (+1.16%) were the top gainers, while Consumer Products & Services (-0.34%), Healthcare (-0.25%) and Energy (-0.20%) were the top laggards.

Global Markets. Wall Street closed higher on Wednesday, with the Nasdaq Composite rising 1.05% to 26,702.86, the S&P 500 gaining 0.58% to 7,757.17 and the Dow Jones Industrial Average advancing 0.69% to 52,856.09. Technology stocks led the rebound, supported by SpaceX’s 161% YoY revenue growth in 3Q and renewed optimism towards AI-related investments. SpaceX surged 7%, while Nvidia and AMD gained more than 2% and 3%, respectively. However, concerns over the sustainability of AI spending remain, with investors awaiting Tesla and Meta’s earnings for further insights. U.S. Treasury yields were broadly steady, with the 10-year yield at 5.12% and the 30-year yield at 5.43%. In Europe, the STOXX Europe 600 rose 0.92%. Asian markets also closed mostly higher, with South Korea’s KOSPI gaining 3.29% and Japan’s Nikkei 225 rising 0.85%, while Hong Kong’s Hang Seng Index fell 0.90% (CNBC).

Market Outlook. The FBM KLCI’s recovery above the 1,600 psychological level may provide some near-term relief, although the rebound remains vulnerable amid persistent foreign selling and fragile market sentiment. Elevated oil prices and geopolitical uncertainties continue to pose risks to inflation and corporate earnings, while investors are likely to remain cautious ahead of the FOMC’s interest rate decision on 29 October (Malaysia time), as the Fed’s policy signals could influence global risk appetite and foreign fund flows into emerging markets. Meanwhile, renewed optimism towards AI-related stocks following SpaceX’s strong revenue growth could support regional technology sentiment, with major technology companies’ earnings remaining a key catalyst. Domestically, resilient economic growth and more attractive valuations following the recent market correction may encourage selective bargain-hunting in fundamentally sound blue-chips. However, a sustained recovery will depend on improving market breadth and a moderation in foreign fund outflows.

Sector focus. Technology stocks may see renewed buying interest following the rebound in global AI-related shares, although concerns over the sustainability of AI investments could cap further upside. Meanwhile, construction stocks may remain in focus on continued data centre-related project opportunities, with contract flows and orderbook replenishment likely to support earnings visibility among selected contractors.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI rebounded to 1,602.27, reclaiming the 1,600 level but remaining below its EMA9, EMA20, EMA120 and SMA200, indicating that the broader downtrend remains intact. Immediate support is seen at 1,580, followed by 1,560, while resistance lies at 1,610–1,630. The index needs to sustain its recovery above 1,600 to improve near-term sentiment, although continued trading below key moving averages suggests upside may remain limited.

Company News

Sunway Healthcare Holdings Bhd formed a 60:40 JV with Putrajaya Holdings to develop a 325-bed private hospital near Putrajaya Sentral, with construction expected to begin in 4Q2027 and completion targeted for 2031. (The Edge)

Sunway Healthcare Holdings Bhd and Sunway REIT extended the deadline to fulfil conditions for the RM60m acquisition of Sunway Hotel Seberang Jaya to July 28, 2027, from Oct 28, 2026. (The Edge)

Zetrix AI Bhd managing director Wong Thean Soon further reduced his stake to 1.841% after selling 460,000 shares at five sen each, adding pressure to the group’s efforts to resolve its sukuk covenant breach by the Oct 22 deadline. (The Edge)

Malakoff Corp Bhd CFO Mohd Nazersham Mansor will resign effective Nov 30 after nine years in the role, with deputy CFO Nurshazwani Abd Malek assuming the position on an interim basis from Dec 1. (The Edge)

CapitaLand Malaysia Trust reported 3QFY26 net property income up 14.9% YoY to RM79.4m and revenue up 9.1% to RM126.5m, supported by positive rental revisions and contributions from industrial and logistics assets, and declared a 1.35 sen DPU. (The Edge)

Westports Holdings Bhd posted 3QFY26 net profit of RM342.6m, up from RM271.1m a year ago, while revenue surged 42% to RM1.07bn on tariff increases and higher value-added services income. (The Edge)

AME REIT recorded 2QFY27 net property income up 11.4% YoY to RM16m and revenue up 11.9% to RM17.55m, driven by higher rents and new assets, and declared a 2.19 sen DPU payable on Nov 26. (The Edge)

Pantech Global Bhd posted 2QFY27 net profit up 89.5% YoY to RM19.33m and revenue up 36.9% to RM173.71m on higher sales volume and average selling prices, and declared a 2.2 sen interim dividend. (The Edge)

Malaysia Marine and Heavy Engineering Holdings Bhd will contest a RM57.3m arbitration claim brought by subcontractor Haumea Offshore over works on the Bokor Phase 3 Redevelopment Project in Sarawak. (The Edge)

ES Sunlogy Bhd shareholders approved a recurrent related-party transactions mandate with its largest shareholder, Kerjaya Prospek Group Bhd, which holds a 31% stake, to facilitate routine transactions on normal commercial terms. (The Edge)

Mudajaya Group Bhd shareholders were advised to approve the disposal of a 45% stake in Real Jade to major shareholder Minyi Holdings for HK$234m (RM118.45m) to settle outstanding debts, with the independent adviser deeming the transaction fair and reasonable. (The Edge)

Malaysian Market Review. The FBM KLCI edged up 0.24% to 1,599.58 on Tuesday, recovering slightly but remaining below the psychological 1,600 level. Market breadth remained negative, with 751 decliners outnumbering 331 gainers, while 499 counters were unchanged. Sector-wise, Technology (-2.16%), Construction (-1.38%) and Plantation (-0.79%) were the top laggards, while Healthcare (+0.60%), Telecommunications & Media (+0.55%) and Financial Services (+0.37%) were the top gainers.

Global Markets. Wall Street ended mixed on Tuesday, as the Dow Jones rose 1.02% to 52,495.88 and the S&P 500 gained 0.28% to 7,712.57, while the Nasdaq Composite edged down 0.02% to 26,424.82. Gains in the Dow were supported by stronger-than-expected corporate earnings, particularly from 3M and Northrop Grumman, while concerns over AI investment sustainability continued to weigh on technology sentiment. Meanwhile, oil prices retreated from earlier gains, with Brent crude declining to US$109.1/bbl. The pullback in oil prices, alongside lower U.S. Treasury yields, helped support investor sentiment as markets continued to monitor developments in the Middle East. In Europe, the STOXX Europe 600 fell 0.14% amid weakness in technology stocks. Asian markets broadly declined, led by the KOSPI (-3.73%) and Nikkei (-1.30%), as concerns over AI spending weighed on regional technology stocks (CNBC).

Market Outlook. We expect the FBM KLCI to remain volatile, with a potential recovery supported by Wall Street’s mixed but broadly positive performance overnight. The pullback in oil prices and easing U.S. Treasury yields may provide some relief to market sentiment by moderating inflationary pressures and borrowing-cost concerns. However, ongoing geopolitical uncertainties and weakness in regional technology stocks could continue to dampen risk appetite. Investors will also watch Tesla and Meta’s upcoming earnings for further indications of AI investment returns and corporate spending plans, which could influence global technology sentiment. Domestically, persistent foreign fund outflows remain a key headwind despite Malaysia’s resilient economic growth, while the FBM KLCI’s recent decline below 1,600 may encourage selective bargain hunting in fundamentally sound stocks with attractive valuations and dividend yields. Nevertheless, a sustained recovery will likely depend on stabilising foreign flows and improved market breadth.

Sector focus. Energy counters may remain supported by oil prices hovering above US$100/bbl. In contrast, REITs and property counters may remain under pressure amid elevated U.S. Treasury yields, while sentiment across the broader technology sector remains fragile.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI edged up 0.24% to 1,599.58, staging a mild rebound after its recent sell-off but remaining below the psychological 1,600 level and key moving averages. The modest recovery suggests selling pressure may be easing, although the broader trend remains bearish. Immediate support is seen at 1,580, followed by 1,560, while resistance lies at 1,610–1,630. A sustained break above 1,650 would be needed to signal a more meaningful recovery, while failure to reclaim 1,600 could leave the index vulnerable to further downside.

Company News

SD Guthrie Bhd denied allegations that its subsidiaries or employees were responsible for forest and land fires in Indonesia, reiterating its zero-burning policy and commitment to no deforestation, no peat and no exploitation. (The Edge)

MISC Bhd and the Employees Provident Fund (EPF) received an extension until Nov 30 to declare their intentions regarding the proposed privatisation of Yinson Holdings, allowing further evaluation and discussions. (The Edge)

Gamuda Bhd signed an agreement with the Perak government to develop and operate the Northern Perak Water Supply Scheme, which will transfer up to 1,500 million litres of raw water per day from Sungai Perak to Bukit Merah Dam. (The Edge)

Zetrix AI Bhd managing director Wong Thean Soon further reduced his stake to 1.85% after selling 3.13 million shares at five sen each, complicating efforts to resolve the sukuk covenant breach by the Oct 22 deadline. (The Edge)

LYC Healthcare Bhd appealed against its planned delisting from the ACE Market, delaying the delisting pending Bursa Malaysia Securities’ decision, although trading suspension from Oct 27 is still expected. (The Edge)

Computer Forms (Malaysia) Bhd applied for leave to seek judicial review of Bursa Malaysia’s public reprimand over its failed EV joint venture, which also resulted in fines totalling RM2m against eight current and former directors. (The Edge)

Bus Cap Bhd partnered StarCharge Energy to explore EV charging infrastructure and related services in Malaysia, with potential expansion into solar energy, battery storage and smart energy management solutions. (The Edge)

South Malaysia Industries Bhd won a court battle to remove six directors nominated by its largest shareholder, Target 1, after the High Court quashed the Securities Commission’s approval of their appointments and ordered the SC to pay RM15,000 in costs. (The Edge)

Malaysian Market Review. The FBM KLCI fell 0.75% to 1,595.75 on Monday, slipping below the psychological 1,600-point level to its lowest since September 2025, amid persistent foreign selling and global uncertainties. Market breadth turned negative, with 741 decliners outnumbering 322 gainers, while 482 counters were unchanged. Sector-wise, Construction (+0.77%), Industrial Products (+0.76%) and Energy (+0.31%) were the top gainers, while Technology (-1.50%), Financial Services (-1.39%) and REITS (-1.83%) were the top laggards.

Global Markets. Wall Street rebounded on Monday as investors returned to technology stocks following last week’s AI-related sell-off. The S&P 500 gained 0.41% to 7,690.73, while the Nasdaq Composite rose 1.11% to 26,430.89 and the Dow Jones edged down 0.07% to 51,966.03. Semiconductor stocks recovered, with Intel (+2.0%), AMD (+1.8%) and Micron (+3.0%) advancing, although concerns over the sustainability of AI investments and rising debt financing costs persisted following last week’s sharp sell-off. Meanwhile, Brent crude slipped 0.70% to US$109.18/bbl, reflecting divergent movements in oil benchmarks. In Europe, the STOXX Europe 600 fell 0.80%. Asian markets were mixed, with the KOSPI (+1.76%) and Shanghai Composite (+0.39%) advancing, while the Nikkei declined 0.62% (CNBC).

Market Outlook. We expect the FBM KLCI to draw support from Wall Street’s overnight rebound, with the Nasdaq Composite rising 1.11% and the S&P 500 gaining 0.41%, led by a recovery in AI-related semiconductor and memory stocks. However, weak market breadth and elevated U.S. Treasury yields, with the 10-year and 30-year yields at approximately 5.15% and 5.48%, respectively, may limit the positive spillover. Meanwhile, oil prices hovered near US$100/bbl amid geopolitical tensions, keeping inflationary and input-cost concerns in focus. Investors will also monitor upcoming earnings from Tesla and Meta for further clues on the sustainability of the AI rally, while the Fed’s communications blackout leaves markets without fresh policy guidance ahead of next week’s FOMC meeting. Domestically, stronger-than-expected 3Q GDP growth of 5.3% provides a supportive backdrop, although foreign fund flows remain a key swing factor. Overall, the FBM KLCI is likely to trade within a range, with investors remaining selective and favouring domestically driven and defensive counters.

Sector focus. Technology counters may rebound alongside U.S. chip stocks, while Energy counters could stay supported by oil prices near US$100/bbl. Construction may benefit from data centre projects, whereas REITs and Property counters may remain under pressure amid elevated U.S. Treasury yields.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI fell 0.75% to 1,595.75, extending its recent decline as the index lost the 1,600 mark and remained below all key moving averages. The breach of this psychological threshold suggests downside risks remain elevated, with the next support levels at 1,580 and 1,560. On the upside, 1,610–1,630 is likely to act as an immediate resistance zone, while a recovery above 1,600 would be the first sign of stabilisation.

Company News

Zetrix AI Bhd withdrew its planned 0.25 sen dividend for FY2026 to conserve RM19.74m in cash amid unexpected operating expenses, while managing director Wong Thean Soon further reduced his stake to 1.887%, complicating efforts to resolve the RM2bn sukuk covenant breach by Oct 22. (The Edge)

Toyo Ventures Holdings Bhd received a privatisation offer from its largest shareholder at 28 sen per share via a selective capital reduction, representing a 16.67% premium to its Oct 16 closing price. (The Edge)

Mi Technovation Bhd launched the Singapore IPO of its semiconductor materials unit, Mi Material Holding, targeting S$168.2m in proceeds at S$1.80 per share, with listing scheduled for Oct 28; Mi Technovation will receive RM46.8m from the offer for sale. (The Edge)

IHH Healthcare Bhd will acquire Afiniti Wellness in Iskandar Puteri to expand Gleneagles Hospital Johor into an integrated healthcare campus spanning approximately 18 acres, with the property to be converted into an ambulatory care centre. (The Edge)

Duopharma Biotech Bhd reached an amicable settlement with Sun Pharmaceutical Industries over a drug trademark dispute, resulting in the withdrawal of the lawsuit and cancellation of the trial. (The Edge)

LYC Healthcare Bhd faces potential suspension on Oct 27 and delisting on Oct 29 after losing its sponsor for its GN3 regularisation plan, unless it appeals by Oct 26. (The Edge)

KIP Real Estate Investment Trust reported 1QFY27 net property income up 18% YoY to RM34.95m, while revenue increased 19.6% to RM48.75m, driven by contributions from newly acquired retail and industrial assets. (The Edge)

GDB Holdings Bhd secured a RM119m subcontract for construction works under Sarawak’s National Flood Forecasting and Warning Programme Phase 3, with completion scheduled for Nov 29, 2029. (The Edge)

MMAG Holdings Bhd agreed to sell a Boeing 737-400SF cargo aircraft for US$2.8m (RM11.43m), resulting in an estimated RM12.69m loss as it seeks to reduce costs amid higher fuel prices and weaker charter demand. (The Edge)

Jati Tinggi Group Bhd secured a RM30.1m contract to build power infrastructure for a data centre in Kulai, Johor, involving 275kV underground cable ducting and temporary 11kV power cables, with completion due by July 2027. (The Edge)

Cosmos Technology International Bhd proposed to acquire a 51% stake in electronic manufacturing services provider Orisystems Opto for RM16.52m via the issuance of 33.05m new shares at 50 sen each. (The Edge)

Eonmetall Group Bhd saw Datuk Seri Lee Hock Seng cease to be a substantial shareholder after disposing of 6.09m shares worth an estimated RM2.68m, reducing his stake from 5.57% to 4.21%. (The Edge)

• Exports surged +54.5% YoY in September (Aug: +45.4%), while imports accelerated to +52.7% (Aug: +41.1%). The trade surplus widened to RM33.7bn (Aug: RM28.1bn).

• Manufacturing led export growth, while commodity exports improved.

• Sustained growth in intermediate imports points to robust manufacturing activity ahead.

• We raise our 2026 export growth forecast to +35.1% YoY (previously: +26.2%), reflecting stronger-than-expected YTD growth momentum.

• Downside risks include prolonged Middle East tensions and continued uncertainty surrounding US trade policy.

Another month of positive surprise

Malaysia’s exports surprised to the upside in September, surging +54.5% YoY (Aug: +45.4%) and beating Bloomberg consensus of +39.9%. Import growth also accelerated to +52.7% (Aug: +41.1%), driven by stronger intermediate and consumption goods imports. Consequently, the trade surplus widened to RM33.7bn (Aug: RM28.1bn). On a YTD basis, exports and imports grew +34.0% and +25.7% respectively (9M25: +5.0% and +4.1%).

Broad-based improvement

Manufacturing exports accelerated to +58.6% YoY (Aug: +50.4%), led by sustained E&E strength (+69.2%; Aug: +66.5%) amid the AI-led global tech upcycle. Non-E&E manufacturing also gained momentum (+46.2%; Aug: +35.1%), driven by petroleum products (+33.2%; Aug: +21.7%), machinery, equipment & parts (+38.4%; Aug: +27.8%) and optical & scientific equipment (+43.2%; Aug: +23.5%).

Commodity exports also improved. Mining exports surged +56.3% YoY (Aug: +43.3%), supported by a sharp rebound in crude petroleum exports (+68.9%; Aug: -19.3%), while LNG remained firm (+45.7%; Aug: +51.8%). Meanwhile, agriculture exports declined at a slower pace (-5.7%; Aug: -21.6%), as palm oil exports fell at a more moderate rate (-9.1%; Aug: -25.1%). 

By destination, exports to Taiwan (+175.2% YoY; Aug: +102.2%), the EU (+35.3%; Aug: +28.4%) and China (+22.1%; Aug: +19.9%) strengthened. Exports to the US remained robust (+89.9%; Aug: +130.4%), albeit at a slower pace. Within ASEAN, exports to Thailand (+57.3%; Aug: +33.2%) and Vietnam (+55.0%; Aug: +28.3%) accelerated, while shipments to Singapore (+50.4%; Aug: +58.4%) and Indonesia (+9.5%; Aug: +11.5%) moderated.

Intermediate imports reaffirm manufacturing momentum

Capital goods imports continued to expand (+20.9% YoY; Aug: +37.2%), pointing to sustained investment activity. Meanwhile, intermediate goods imports recorded double-digit growth for the fifth consecutive month (+69.6%; Aug: +50.5%), signalling robust demand for industrial inputs and sustained manufacturing activity ahead. Consumption goods imports also rebounded (+18.2%; Aug: -1.7%).

Raising export forecast

We raise our 2026 export growth forecast to +35.1% YoY (previously: +26.2%), reflecting stronger-than-expected 9M26 growth momentum of +34.0% YoY. We remain positive on E&E exports, underpinned by the global tech upcycle and structural demand for AI-related applications. Meanwhile, LNG exports should remain resilient, supported by elevated oil prices and potential trade diversion arising from the Middle East conflict. Robust intermediate imports also point to a firm manufacturing orderbook and near-term support for export activity. 

Nonetheless, export growth is likely to moderate going forward amid an unfavourable high base effect. Downside risks remain, particularly from prolonged Middle East tensions that could disrupt global trade flows and continued uncertainty surrounding US trade policy. Malaysia also remains exposed to higher US tariffs, pending the outcome of the ongoing Section 301 investigation into excess capacity.

• Headline inflation eased to +1.8% YoY in September (Aug: +1.9%), driven by slower price gains in electricity and food.

• Core inflation was steady at +1.7% YoY, pointing to subdued underlying price pressures.

• Targeted fuel subsidies should cushion the impact of higher energy prices on inflation.

• We revise our 2026 inflation forecast to +1.8% YoY (previously +2.0%), within the official projection range of 1.5-2.5%.

• We maintain our 2027 inflation forecast at +2.0% YoY (MoF: 1.8-2.8%) with upside risks.

Subdued inflation in September

Malaysia's headline inflation eased to +1.8% YoY in September (Aug: +1.9%), marginally below consensus of +1.9%. On a month-on-month basis, inflation rose by a modest +0.1% MoM (Aug: +0.3%), pointing to limited pass-through of higher commodity prices and business costs to consumer prices at this juncture.

The moderation was driven mainly by housing, water, electricity, gas & other fuels (+1.4% YoY; Aug: +2.1%), reflecting a lower electricity surcharge under the Automatic Fuel Adjustment (AFA) mechanism (3.67 sen/kWh; Aug: 3.80 sen/kWh). The higher household electricity subsidy threshold of 800 kWh effective September also helped cushion electricity costs. Food & beverages inflation eased to +1.8% YoY (Aug: +1.9%), driven by slower price gains in food at home (+1.2%; Aug: +1.4%).

Meanwhile, transport inflation accelerated to +2.5% YoY (Aug: +2.0%), reflecting higher pump prices for RON95 (RM4.16/litre; Aug: RM3.75/litre), RON97 (RM4.64/litre; Aug: RM4.28/litre) and diesel (RM5.05/litre; Aug: RM4.60/litre). For context, Brent crude breached USD100/bbl in September for the first time since late July amid renewed escalation in US-Iran tensions and disruptions to Saudi Arabia's oil infrastructure.

Underlying price pressures remain subdued

Core inflation remained steady at +1.7% YoY (Aug: +1.7%), below its 2021-2025 average of +2.1%. The persistently low core inflation rate points to subdued underlying price pressures, suggesting limited demand side inflationary pressure. On a month-on-month basis, core inflation rose +0.3% MoM (Aug: +0.3%).

Lower forecast this year; upside risks in 2027

With 9M26 inflation averaging just +1.8% YoY, we revise our full-year 2026 inflation forecast to +1.8% (previously +2.0%), reflecting limited buildup in consumer price pressures despite global supply disruptions and elevated commodity prices. Our revised forecast remains within the official projection range of 1.5-2.5%.

For 2027, we maintain our inflation forecast at +2.0% YoY (MoF: 1.8-2.8%), although risks remain tilted to the upside. Key factors to watch include i) volatility in crude oil prices amid prolonged geopolitical tensions; ii) pass-through of elevated business costs to consumer prices; iii) El Niño-related risks to food prices; and iv) demand-side pressures from Budget 2027 measures including cash assistance, higher minimum wages and selective tax cuts. Barring a material overshoot in Brent price above our assumption of USD85/bbl for 2027, we expect inflation to remain broadly stable. Targeted fuel subsidies should continue to cushion the impact of higher energy prices. While the minimum wage increase to RM2,000 could add to business costs, we expect the pass-through to consumer prices to be gradual and modest, consistent with the limited spillover from elevated producer price inflation observed thus far.

OPR hike in 2027

Overall, we expect BNM to keep the OPR at 2.75% at its upcoming MPC meeting on 5 November. Further out, the steady inflation outlook and positive domestic growth prospects support our expectation for BNM to normalise monetary policy, raising the OPR by 25 bps to 3.00% in 2027.

What We Heard

Beyond the Speech. The Maybank–MUFG post-Budget 2027 dialogue on 16 October 2026, led by Treasury Secretary-General Tan Sri Johan Mahmood Merican alongside Maybank IB’s chief economist and MUFG representatives, offered several insights that were not covered in the Budget speech. None changes our call. We maintain our Neutral market stance, our end-2026 FBM KLCI target of 1,770 and our barbell strategy. The remarks below are as reported by the speakers at the event; the interpretation and estimates are ours.

Oil, Not Handouts, Is the Key Fiscal Swing Factor. The Treasury said Budget 2026 was prepared on a Brent assumption of USD65/bbl with petrol subsidies of about RM15bn. The bill is now expected to reach RM40bn, and the Budget keeps it at RM40bn for 2027. The Treasury added that higher oil and gas revenue has not covered the increase, because alternative crude supply is costlier, and described oil prices as stubbornly above USD100. The key market concern is whether Brent crude price will average above the Budget’s USD85/bbl assumption for 2027. Using our illustrative sensitivity of RM1.25bn of additional fuel subsidies for every USD1/bbl increase in Brent, prices averaging USD100/bbl in 2027 could add c.RM19bn to the subsidy bill. That is equivalent to c.0.8% of GDP before revenue offsets or policy adjustments (Table 2). This is a simplified scenario rather than an official fiscal forecast.

Development Spending Could Become the Release Valve. At the dialogue, MoF acknowledged that higher subsidy costs squeeze what it can afford in development expenditure. It also said the first two years of the 13MP have run below the RM86bn annual average, and signalled a 2027 focus on smaller projects that can be executed within the same year. If oil prices remain elevated, we believe development expenditure disbursement could face pressure as the government seeks to preserve its fiscal consolidation path. This is our forecast, not a government decision. For contractors, it tilts our preference towards private-sector order books, such as data centres, and small-ticket public works rather than a public mega-project re-rating.

Compliance, Rather Than New Taxes, Is the Near-Term Revenue Lever. The Treasury indicated that Budget 2027 deliberately introduced no new taxes and will prioritise compliance. LHDN's initial e-invoicing-related “nudging” exercise generated RM1.5bn in additional tax assessments (assessments raised, not necessarily cash collected). The Treasury also said SST collections have reached 3.1% of GDP, comparable to GST collections in 2017. On GST, the Treasury said the Prime Minister acknowledges its merits but does not see now as the right time given household income levels, citing a median monthly wage of RM3,000. The new sales-tax reclaim for manufacturers might be a hint of the proposed hybrid SST–GST, which is still under study. We view the hybrid model as a potential longer-term policy direction rather than an announced measure. In our view, the absence of a newly announced GST reduces the risk of an additional near-term consumption-tax shock.

Bond Market Response Has Been Supportive. The 10-year MGS yield has fallen c.15bp since Budget Day and is up only c.30bp YTD, against c.90bp for US Treasuries, with USD/MYR stable around 4.08. A short-term rally is evidence of market performance rather than conclusive proof of a re-rating on fiscal credibility, but lower yields matter. The Treasury put debt service charges at RM61bn, or c.16% of revenue, above its internal 15% comfort level. Foreign investors continue to show interest in Malaysia’s data centre sector, although power capacity and land availability remain key constraints.

GLICs and PETRONAS Carry More of the Load. MoF defended the RM25bn GLIC domesticinvestment push and cited VITROX (BUY; TP: RM11.12) and SkyeChip (BUY; TP: RM3.76) as examples of the home-grown E&E champions it wants to see listed. This signals policy support for the theme rather than direct orders or earnings for these companies. The Treasury added that PETRONAS is also investing further in Pengerang to secure fuel supply. A more stretched PETRONAS reinforces our caution on O&G services capex.

Illustrating the oil risk

The Treasury's figures imply that the 2026 fuel subsidy estimate rose by c.RM25bn as the Brent assumption moved from USD65 to USD85, a ratio of c.RM1.25bn per USD1/bbl. We use this only as an illustrative sensitivity. The increase cannot be attributed to Brent alone, since subsidy volumes, product prices, the exchange rate and policy changes all play a part, and the relationship is unlikely to be linear. Applying it to 2027 nominal GDP of c.RM2.32tn gives the scenarios in Table 2. The estimates are gross: they exclude higher petroleum income tax and PETRONAS dividends, and any tightening of the BUDI95 quota. The Treasury noted that less than 1% of users fully utilise the 300-litre quota. Given the Fiscal Responsibility Act, we believe any overrun is more likely to be absorbed through slower DE disbursement than a wider deficit.

Stay Neutral, sharpen the barbell

The dialogue reinforces our view that Budget 2027 is about continuity, not catalysts. Investors at the event summed it up as “same story, different year”. We therefore keep the market at Neutral and refine both legs of the barbell. On the growth side, we favour exposure to E&E upgrading, power capacity for data centres and private-sector construction, with the LSS6 award a catalyst to monitor. On the resilient side, we pair regulated utility earnings with mass-market consumer staples. We avoid labour-intensive companies facing the RM2,000 minimum wage, contractors reliant on public mega-project awards, and O&G services exposed to PETRONAS capex discipline.

Risks to our view

Upside risks are a faster fall in oil prices, which would free fiscal room for DE, and stronger foreign inflows if the bond rally extends. Downside risks are:

i. Brent sustained above USD100, pressuring DE disbursement;

ii.  implementation friction as agencies adapt to the new procurement framework under the Government Procurement Act from 2027; and

iii. an earlier GE16 timeline.

iv. The bond market does not appear to be pricing our forecast OPR hike to 3.00% by end-2027. If the hike does not materialise, regulated yield plays such as TENAGA would benefit.

• Malaysia's economy expanded +5.3% YoY in 3Q26 (2Q26: +6.0%), exceeding our forecast and Bloomberg consensus, driven by manufacturing and agriculture.

• The 3Q26 GDP print points to upside to our 2026 GDP growth forecast of +5.0% YoY, with growth potentially reaching +5.4%.

• Nonetheless, we remain cautious over uneven growth momentum, with growth likely to moderate further in 4Q26 amid the high base effect.

• We expect the moderation to extend into 2027, with geopolitical tensions, trade policy uncertainty, El Niño and cost pressures weighing on growth.

• We maintain our 2027 GDP growth forecast at +4.5% YoY.

3Q26 GDP beats expectations

Malaysia's economy expanded +5.3% YoY in 3Q26 (2Q26: +6.0%), according to the advance GDP estimate released by the Department of Statistics Malaysia (DoSM). Despite the moderation, the print exceeded our in-house forecast of +4.6% and Bloomberg consensus of +5.1%. This brings 9M26 growth to +5.5% (9M25: +4.8%), above our earlier expectations. The final 3Q26 GDP data will be released on 18 November.

Sectoral performance remains uneven

The resilient performance was driven by manufacturing and agriculture. Manufacturing growth edged higher to +7.5% YoY (2Q26: +7.3%), reflecting sustained E&E demand amid the ongoing global AI upcycle. Agriculture rebounded to +1.3% (2Q26: -3.7%), contributing 0.1 ppts to headline GDP growth (2Q26: -0.2 ppt), supported by stronger palm oil output.

However, the strong headline growth masks uneven performance across sectors. Services growth slowed to a one-year low of +5.4% YoY (2Q26: +5.9%), while construction moderated for the seventh consecutive quarter to +6.0% (2Q26: +6.5%) following double-digit growth in 2024 and 2025. Nevertheless, data centre projects continue to provide some support to construction activity. Meanwhile, mining contracted by 4.9% (2Q26: +9.3%) amid lower petroleum output.

Upside to our 2026 growth forecast, but risks persist into 2027

The stronger-than-expected 3Q26 GDP print points to upside to our current 2026 GDP growth forecast of +5.0% YoY, with growth potentially reaching +5.4%. This implies that GDP growth this year could also potentially overshoot the MoF’s revised target of 4.8-5.3% (point forecast: +5.2%). We will review our forecast following the release of the final 3Q26 GDP data next month.

Overall, we remain cautious over the sustainability of recent growth momentum. The strong headline growth has been driven mainly by robust manufacturing, particularly the E&E segment. In contrast, construction has shown clear signs of moderation, while agricultural output could remain volatile amid potential El Niño disruptions to palm oil yields. Furthermore, growth moderation could become more pronounced in 4Q26 due to the high base from last year's strong performance, with lingering haze conditions posing downside risks to domestic activities.

Importantly, we expect the moderation to extend into 2027, with prolonged geopolitical tensions, uncertainty over global trade policies, lagged impacts from the El Niño phenomenon and elevated business costs weighing on growth. That said, overall growth should remain underpinned by steady household spending amid supportive policy measures, the realisation of approved investments and firm external demand amid the global tech upcycle. We maintain our 2027 GDP growth forecast at +4.5% YoY (MoF: 4.2-5.2%; point forecast: +4.6%).

Malaysian Market Review. The FBM KLCI fell 0.98% to 1,607.76 on Friday, extending its losses despite better-than-expected 3Q26 GDP growth of 5.3%, as cautious sentiment weighed on the local bourse. Market breadth turned positive, with 597 gainers outnumbering 470 decliners, while 517 counters were unchanged. Sector-wise, Technology (+1.59%), Telecommunications & Media (+1.54%) and REIT (+1.36%) led the gains, while Plantation (-2.39%), Industrial Products & Services (-2.33%) and Construction (-0.64%) were the top laggards.

Global Markets. Wall Street ended lower on Friday, as renewed selling in technology and AI-related stocks, alongside rising oil prices, weighed on sentiment. The S&P 500 fell 1.09% to 7,659.44, while the Nasdaq Composite dropped 2.15% to 26,140.03 and the Dow Jones declined 0.34% to 52,002.41. Semiconductor stocks remained under pressure amid concerns over intensifying Chinese competition and rising AI infrastructure financing costs. Meanwhile, Brent crude rose to US$109.86/bbl amid escalating geopolitical tensions involving the US, Iran and Russia-Ukraine, adding to inflationary concerns. In Europe, the STOXX Europe 600 rose 0.72% in early trading as technology stocks rebounded. Asian markets ended higher, with the Nikkei (+1.39%), Hang Seng (+0.52%), KOSPI (+2.05%), supported by a rebound in technology stocks following the previous session’s sell-off (CNBC).

Market Outlook. We expect the FBM KLCI to remain cautious in the near term, as persistent foreign selling and heightened global uncertainties continue to weigh on investor sentiment. The recent selloff in US technology and AI-related stocks, coupled with elevated oil prices and inflationary pressures, could further dampen risk appetite ahead of the Federal Reserve’s policy decision on 29 October (Malaysia time). Domestically, investors will continue to assess Malaysia’s economic outlook following 3Q26 GDP growth of 5.3%, while monitoring the potential impact of rising operating costs on corporate earnings, particularly among labour-intensive businesses. We believe a sustained market recovery will depend on improved foreign fund flows and greater stability in global markets.

Sector focus. Construction and utilities could remain in focus, supported by continued data centre investments and rising electricity demand. Meanwhile, energy stocks may attract attention as Brent crude remains above US$100/bbl amid escalating geopolitical tensions.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI remains in a downtrend, trading below its EMA9, EMA20, EMA120 and SMA200, signalling persistent selling pressure. Immediate support is located at 1,600, followed by 1,580, while resistance lies at 1,630–1,640. The near-term outlook remains weak unless the index reclaims the 1,650 level, with a decisive break below 1,600 potentially triggering further downside.

Company News

Zetrix AI Bhd faces potential sukuk payment obligations of RM2.16bn if it fails to resolve a covenant breach by Oct 22, following managing director Wong Thean Soon’s loss of largest-shareholder status after forced share sales. (The Edge)

Genting Bhd executive chairman Tan Sri Lim Kok Thay increased his deemed stake to 45.24%, or 1.74bn shares, after acquiring an additional 6.42m shares amid the stock’s sell-off following its proposed RM1.25bn rights issue. (The Edge)

Genting Plantations Bhd’s property division partnered Huawei Malaysia to master-plan Johor Tech Smart City, including a 430-acre smart campus featuring AI-enabled planning capabilities. (The Edge)

IOI Properties Group Bhd said its board has yet to deliberate on the potential acquisition of Singapore’s Chijmes retail venue and Capitol Kempinski hotel, following reports that the group was in exclusive talks for the assets. (The Edge)

Public Bank Bhd’s Hong Kong-listed subsidiary expects a HK$1.964bn goodwill impairment, potentially reducing the parent’s net assets and EPS by four sen, and plans to privatise the subsidiary for HK$734.75m. (The Edge)

RHB Bank Bhd sought an extension from Bank Negara Malaysia to conclude negotiations with Tokio Marine Asia on a proposed merger of their Malaysian insurance businesses. (The Edge)

Cape EMS Bhd partnered FIC Global’s Malaysian unit to support its optical transceiver manufacturing expansion in Johor, while proposing to issue 50m redeemable convertible preference shares at RM1 each to raise RM50m. (The Edge)

Turiya Bhd saw Datuk Vijayasundaram Jeyabalan become its second-largest shareholder with a 9.09% stake after subscribing for 22.872m shares through a private placement at 40 sen each, raising RM9.15m for the company. (The Edge)

EGH International Bhd fell 15.6% from its 16 sen IPO price to close at 13.5 sen on its ACE Market debut, after touching an intraday low of 12 sen amid relatively weak demand. (The Edge)

Westport Holdings Bhd is expected to beat 3QFY26 earnings consensus on stronger throughput and value-added services, with tariff hikes expected to support growth into 2027. (The Edge)

Cosmos Technology International Bhd secured a RM3.93m contract to supply data loggers and advanced pressure management equipment to Kedah’s water operator, SADA, over four months. (The Edge)

Malaysian Market Review. The FBM KLCI fell 4.02 points, or 0.25%, to 1,623.70 on Thursday, from Wednesday’s close of 1,627.72. Market breadth was sharply negative with losers outnumbering gainers, 852 vs 294. Tracking Wall-Street losses, risk-off sentiments developed as the sustainability of AI-related capex was called into question. Sector-wise, most sectors were laggards with Technology (-3.53%), Industrial Products (-2.04%), and Healthcare (-1.74%) being the main laggards while Finance (+0.01%) was the only gainer.  

Global Markets. Wall Street rebounded on Thursday, with the Dow rising 1.08% to 52,177.69, the S&P 500 gaining 0.33% to 7,744.06 and the Nasdaq edging 0.08% higher to 26,713.03, as investors rotated out of AI-related technology stocks and into Healthcare, Consumer and Materials despite another hot inflation print. September US producer prices surged 1.3% MoM and 6.3% YoY, marking the largest monthly increase in 4½ years, driven largely by higher gasoline and diesel costs. The STOXX Europe 600 rising 0.38% to 640.16, supported by a 2.4% gain in Healthcare stocks and stronger corporate earnings, although Technology fell 1.5% amid continued concerns over AI-related valuations and funding costs. Asian markets saw a much sharper sell-off, with South Korea’s KOSPI plunging 7.57% to a six-month low and triggering a circuit breaker as Samsung Electronics and SK Hynix fell 9.5% and 11.1%, respectively. Japan’s Nikkei 225 dropped around 4.9%, while Hong Kong’s Hang Seng declined 1.03%, as concerns over debt-funded AI infrastructure investment and higher interest rates drove a broad de-risking across technology stocks. Brent crude edged 0.13% lower to US$105.69/bbl as expectations of additional supply from possible US sanctions relief offset continued Middle Eastern supply risks.

Market Outlook. Market sentiment may recover somewhat following Wall Street’s overnight rebound although the rotation out of US AI-related Technology stocks may continue to dampen global risk appetite. Furthermore, Thursday’s sharply negative local market breadth also indicates that underlying risk appetite remains fragile despite relative resilience in the benchmark index. We therefore expect large-cap defensive names to provide support to the KLCI, while broader-market participation may remain subdued heading into the weekend. Overall, we expect the KLCI to remain range-bound, with investors likely to favor selective domestic and defensive exposures following subdued risk appetite.

Sector focus. Following subdued risk appetite and the recent rotation out of Technology, sectors with defensive characteristics and reduced sensitivity to Technology may be resilient picks. Plantation stands to benefit as tighter oil fundamentals into 2027 remain supportive of CPO prices while Utilities possess a defensive earnings profile. Lastly, large-cap Finance names may see support as resilient economic fundamentals continue supporting the KLCI index.

Technical Commentary: The FBM KLCI fell marginally lower to 1,623.70, with the 1,600-level serving as immediate support. However, the index remains below most key moving averages, while the bearish Shooting Star candlestick formed on 14 October reinforces the view that the overall trend remains weak. A decisive break below 1,600 could see the index retreat towards 1,580, while any rebound is likely to encounter selling pressure. To improve the technical outlook, the index needs to reclaim the 1,640–1,650 range, with a break above 1,650 signalling a stronger bullish reversal. Until then, the bias remains bearish.

Company News

Zetrix AI Bhd on Thursday confirmed it is under police investigation following a Bursa Malaysia query about a news report on the probe. (The Edge)

Bus Cap Bhd said it was unaware of any corporate developments that have triggered an unusual market activity (UMA). (The Edge)

Sunway Bhd said its property arm, Sunway Property, soft-launched Tower C — the final tower of Sunway Velocity 3 — on Oct 10 virtually, following a 98% take-up rate across Towers A and B within two years. (The Edge)

AWC Bhd outperformed the broader market on Thursday after the engineering services firm added another contract related to data centres to its books. (The Edge)

CTOS Digital Bhd reversed course toward a new all-time low on Thursday as more analysts downgraded the digital services firm following a major cybersecurity incident. (The Edge)

Astaka Padu Sdn Bhd and Kimlun Corporation Bhd are extending their partnership to jointly develop the RM450 million gross development value Amora Serviced Residence (ASR) in Johor Bahru. (The Edge)

CelcomDigi Bhd said its wholly-owned subsidiary, CelcomDigi Telecommunications Sdn Bhd, has accepted a spectrum award from the Malaysian Communications and Multimedia Commission (MCMC) worth RM381.75 million to strengthen its mobile network. (The Edge)

Vestland Bhd has secured a contract worth RM225.07 million to undertake river widening and related flood mitigation works in Kelantan. (The Edge)

HeiTech Padu Bhd has secured a RM19.87 million contract extension from the Immigration Department to continue maintaining the Malaysian Immigration System (MyIMMs) for another two years. (The Edge)

Duopharma Biotech Bhd said on Thursday its wholly-owned unit has secured exclusive rights to distribute Taiwan-based Enimmune Corp's hand, foot and mouth disease (HFMD) vaccine in Malaysia, Singapore and Brunei, subject to regulatory approval in the three countries. (The Edge)

Mycron Steel Bhd has discontinued its bid to mount a court challenge against the government’s decision to remove anti-dumping duties on specific imported steel products. (The Edge)

HCK Capital Group Bhd is kicking off construction of the first phase of its RM1.8 billion e.Sentral SmartCity development in Shah Alam by awarding a RM220 million construction contract to Alphazen Contract Sdn Bhd. (The Edge)

JAKS Resources Bhd has proposed to place out up to 10% of its total issued shares to third-party investors to be identified to raise an estimated RM40.71 million for debt repayment and working capital. (The Edge)

Citaglobal Bhd has proposed a capital reduction of RM255 million to wipe out its accumulated losses and create retained earnings to enable a share buyback. (The Edge)

 PJBumi Bhd is proposing a private placement of up to 10% of its shares to raise RM31.1 million for existing and future contracts. (The Edge)

Malaysian Market Review. The FBM KLCI rose 4.37 points, or 0.27%, to 1,627.72 on Wednesday, from Tuesday’s close of 1,623.35. Market breadth was slightly positive with gainers leading losers, 541 vs 532, as the market continues to benefit from bargain-hunting in larger-cap names and resilient economic fundamentals. Sector-wise, Healthcare (+2.77%), Transportation & Logistics (+1.05%), and Plantation (+0.95%) led gains while Construction (-1.40%), Energy (-0.84%), and Utilities (-0.59%) led decliners.

Global Markets. Wall Street fell on Wednesday, with the Dow declining 0.09%, to 51,621.48, while the S&P 500 dropped 1.11% to 7,718.94 and the Nasdaq slid 1.88% to 26,692.87. September US inflation came in hotter than expected and revived concerns over further Federal Reserve tightening. Headline CPI rose 0.6% MoM and 3.7% YoY, while core CPI increased 0.3% MoM and 2.6% YoY. Market-implied odds of an October Fed hike consequently rose to around 37% from 22% a day earlier. In European markets, the STOXX Europe 600 gained 0.43% to 637.75, supported by Healthcare stocks and stronger-than-expected results from ASML, whose outlook helped reaffirm longer-term AI-related semiconductor demand. Asian markets were mixed to weaker as an early rebound in semiconductor stocks faded, with the Nikkei 225 edging around 0.05% higher, while South Korea's KOSPI fell around 0.44% and Hong Kong's Hang Seng slipped 0.13%. Brent crude settled higher at c.US$106.11/bbl as renewed attacks on vessels in the Strait of Hormuz and threats of further disruptions kept Middle Eastern supply risks elevated.

Market Outlook. The market sentiment may remain fragile as hotter-than-expected US inflation and renewed expectations of further Federal Reserve tightening could dampen regional risk appetite. While Wednesday’s improvement in market breadth and continued bargain-hunting in large-cap stocks suggest that underlying domestic sentiment has stabilised, upside could be constrained by higher-for-longer rate expectations, persistent foreign selling and continued Middle Eastern geopolitical risks. Overall, we expect the KLCI to remain range-bound, with investors likely to favour selective domestic and defensive exposures.

Sector focus. Plantation could maintain a positive bias as elevated energy prices improve the relative economics of biodiesel while expectations for tighter palm oil fundamentals into 2027 remain supportive of CPO prices. Upstream Energy counters may see selective buying as Brent remains above US$100/bbl, although the sector could remain volatile alongside developments in the Middle East. Transportation & Logistics could trade mixed, with stronger domestic activity providing support while elevated oil prices raise fuel-cost concerns.

Technical Commentary: The FBM KLCI continues to edge higher, with the 1,600-level serving as immediate support. However, the index remains below most of the key moving averages, suggesting that the overall trend is still weak. A decisive break below 1,600 could see the index retreat towards 1,580, while any rebound is likely to encounter selling pressure. To improve the technical outlook, the index needs to reclaim the 1,640–1,650 range, with a break above 1,650 signalling a stronger bullish reversal. Until then, the bias remains bearish.

Company News

EcoSys (Malaysia) Bhd's shares almost tripled in value on its first day of listing on the ACE Market amid strong demand for a piece of the semiconductor services firm. (The Edge)

Gamuda Bhd said its joint venture has secured a contract worth RM3.7 billion to build the Keelung mass rapid transit system (MRT) and trackwork project in Taiwan. (The Edge)

Epicon Bhd said its 70%-owned subsidiary has accepted a RM47.38 million subcontract from IJM Construction Sdn Bhd for the supply of concrete support beams for the New Pantai Expressway (NPE) extension. (The Edge)

AWC Bhd said on Wednesday it has secured a RM40 million subcontract for plumbing and sanitary works at a hyperscale data centre in Bandar Spring Hill, Port Dickson, Negeri Sembilan. (The Edge)

JAG Bhd said it is acquiring a freehold industrial land in Shah Alam for RM36.89 million cash to expand its total waste management business. (The Edge)

Genting Bhd has earmarked RM280 million from its proposed RM1.25 billion rights issue to pay interest and other financing costs. (The Edge)

Infomina Bhd started strong in its first quarter, posting a 26.76% increase in net profit as higher contributions from its technology infrastructure operations segment boosted performance. (The Edge)

Bus Cap Bhd’s share price jumped 22.61% on Wednesday, triggering an unusual market activity (UMA) query from Bursa Malaysia Securities. (The Edge)

IHH Healthcare Bhd is considering joining the race to buy Malaysian hospital assets being sold by TPG Inc, people with knowledge of the matter said. (The Edge)

Malaysian Market Review. The FBM KLCI rose 5.34 points, or 0.33%, to 1,623.35 on Tuesday, from Monday’s close of 1,618.01. Market breadth, however, was negative with losers leading gainers, 813 vs 381. The recovery in the KLCI continues with bargain-hunting taking advantage of attractive valuations and resilient economic fundamentals while being limited by weaker broad market participation and foreign selling pressure. Sector-wise, Healthcare (+1.74%), Finance (+0.93%), and REIT (+0.38%) led gainers while Technology (-4.07%), Construction (-0.86%), and Telecommunications & Media (-0.86%) were the main laggards.

Global Markets. Wall Street ended marginally lower on Tuesday, with the Dow falling 180.45 points, or 0.35%, to 51,670.10, while the S&P 500 slipped 0.02% to 7,805.45 and the Nasdaq declined 0.15% to 27,204.38, as continued weakness in semiconductor stocks and mixed third-quarter bank earnings offset easing Treasury yields and crude oil prices. European markets also edged lower, with the STOXX Europe 600 declining 0.1% to 635.01 as a 1.6% fall in technology stocks offset support from lower oil prices. Asian markets were mostly weaker, led by a 5.46% drop in South Korea's KOSPI and a 1.82% decline in Japan's Nikkei 225 as semiconductor shares sold off sharply, while Hong Kong's Hang Seng gained 0.3% and China's Shanghai Composite edged 0.1% higher. On the economic front, the IMF raised its 2026 global growth forecast to 3.1% from 3.0%, citing continued AI-related investment, although it warned that elevated oil prices, rising bond yields, geopolitical tensions and a potential correction in AI investment remain significant downside risks.

Market Outlook. The FBMKLCI should continue to trade cautiously with a positive bias, supported by continued bargain-hunting and resilient domestic fundamentals. However, Tuesday’s sharply negative market breadth despite another day of KLCI gains suggests that recovery remains concentrated in selected larger-cap names. In addition, persistent foreign selling and weakness across regional technology markets could therefore limit further upside. Easing US Treasury yields and crude oil prices may provide some relief, although investors are likely to remain cautious ahead of key US inflation data. Overall, we expect the KLCI to remain range-bound with a selective trading bias, as domestic policy support offsets an uncertain global macro backdrop.

Sector focus. Financials may prove relatively resilient, supported by sustained buying interest in banking heavyweights, despite continued foreign selling pressure. REITs could be underpinned by the easing global bond yields, encouraging bargain-hunting as a result. Should geopolitical tensions renew in the Middle-East, Energy names may trade favourably.

Technical Commentary: The FBM KLCI continues to edge higher, with the 1,600 level serving as immediate support. However, the index remains below all key moving averages, suggesting that the overall trend is still weak. A decisive break below 1,600 could see the index retreat towards 1,580, while any rebound is likely to encounter selling pressure. To improve the technical outlook, the index needs to reclaim the 1,625–1,650 range, with a break above 1,650 signalling a stronger bullish reversal. Until then, the bias remains bearish.

Company News

Sime Darby Bhd’s wholly owned subsidiary, Sime Darby Holdings Bhd (SDHB), has been slapped with a RM150.18 million tax bill from the Inland Revenue Board (IRB) for the 2017 to 2023 assessment years. (The Edge)

Kelington Group Bhd has secured a RM128 million contract from an existing customer to design and build water generation and wastewater treatment systems for a data storage manufacturing facility in Kuching. (The Edge)

Critical Holdings Bhd said an additional RM74.1 million has been added to the value of the contract it secured from an undisclosed US-based multinational corporation to build a cleanroom facility at Kulim Hi-Tech Park in Kedah. (The Edge)

Censof Holdings Bhd has secured a contract worth RM10.8 million to install a financial management system at the Malaysian Cooperative Commission. (The Edge)

Lianson Fleet Group Bhd has acquired its third Ultramax bulk carrier for US$23 million (RM93.9 million), as part of its ongoing diversification beyond its offshore support vessel business. (The Edge)

Pantech Global Bhd is disposing of a 10-acre freehold land which it acquired less than two years ago for the expansion of its operations in Klang, for RM31.73 million in cash. (The Edge)

HIS TIZA Pahang Sdn Bhd, a company linked to the Pahang crown prince, has entered into a share sale agreement with state government-owned Amanah Saham Pahang Bhd to acquire a 30% stake in Mentiga Corp Bhd for RM21 million cash. (The Edge)

Binasat Communications Bhd has proposed to undertake a private placement of up to 60.43 million shares, representing not more than 10% of its total issued shares, to raise money for existing and future contracts. (The Edge)

CTOS Digital Bhd whose shares fell to a record low on Tuesday, expects its recent cybersecurity breach to reduce its financial year ending Dec 31, 2026 (FY2026) profit after tax and minority interests (Patami) by RM12 million and revenue by RM16 million. (The Edge)

Malaysian Market Review. The FBM KLCI rose 10.15 points, or 0.59%, to 1,618.01 on Monday, from Friday’s close of 1608.45. Market breadth was positive with losers leading gainers, 778 vs 344. Following Budget 2027 enthusiasm, markets have cooled somewhat although the Budget should continue to support fundamentals and market sentiment. Having said that, elevated bond yields and geopolitical risks continue to limit the upside. Sector-wise, Finance (+0.92%) and Transportation & Logistics (+0.49%) led gainers while Healthcare (-2.40%), Consumer (-2.04%) and Utilities (-1.18%) were the main laggards.

Global Markets. Wall Street ended mixed on Monday, with the Dow rising 0.38%, to 51,850.55, while the S&P 500 slipped 0.06% to 7,807.24 and the Nasdaq declined 0.44% to 27,245.90, as a renewed rise in crude oil prices and weakness in semiconductor stocks offset gains in selected defensive and energy names. Sentiment was also weighed by comments from Cleveland Fed President Beth Hammack, who argued that monetary policy should move relatively quickly towards a more restrictive stance, lifting market-implied odds of an October rate hike to around 22% from 17.7% on Friday. European markets performed better, with the STOXX Europe 600 rising 0.65% to 635.65, supported by a 1.5% gain in banking stocks despite crude oil remaining near two-week highs following renewed attacks on Saudi Arabia. Asian markets were mixed, with South Korea’s KOSPI falling around 3.6% as technology shares came under pressure, while Hong Kong’s Hang Seng edged 0.25% higher and the Shanghai Composite fell around 0.43%; Japanese markets were closed for the Sports Day holiday. Brent crude climbed back above US$106/bbl as the Saudi attacks revived concerns over Middle Eastern supply disruptions.

Market Outlook. We expect the FBM KLCI to trade cautiously with a slight positive bias, as continued optimism surrounding Budget 2027 and strength in selected index heavyweights provide support against a more challenging external backdrop. However, Monday’s sharply negative market breadth despite the higher benchmark suggests underlying risk appetite remains weak and that the post-Budget rally is becoming increasingly selective. Elevated crude oil prices, rising global bond yields and renewed Middle East tensions should continue to cap valuations, particularly as expectations for further US monetary tightening remain in play. Budget 2027 should nevertheless provide a degree of domestic earnings visibility, particularly for sectors exposed to household spending and government development expenditure.

Sector focus. Consumer stocks may continue to attract buying interest from higher cash aid, tax cuts and one-off payments. Banks could benefit mildly from loan growth, supported by RM57bn in guarantee schemes and an additional RM5bn BNM SME facility. Property developers may gain from stamp-duty relief for first homes priced up to RM750k.

Technical Commentary: The FBM KLCI had extended the pause in its downtrend by rising 9.56 points to close at 1,618.01, trading just above the psychological 1,600 level, which is now the key support. Though it extended its pause, the index remains below all key moving averages, showing that the market remains weak. The growing gap between the current price and these averages also suggests that there is still no clear sign of where the market may find support. The index remains vulnerable to further downside, with 1,600 as the key near-term support. A decisive break below this level could open the way towards 1,580, while any rebound is likely to face selling pressure. The outlook would improve only if the index reclaims the 1,625–1,650 range; until then, the bias remains bearish.

Company News

AirAsia Group Bhd co-founder Tan Sri Tony Fernandes met with officials from Malaysia's Finance Ministry two weeks ago to discuss potential government support for Southeast Asia's largest low-cost airline, Reuters reported, citing sources. (The Edge)

IJM Corporation Bhd has secured a RM1.23 billion contract from AT&S Austria Technologie & Systemtechnik (Malaysia) Sdn Bhd to construct semiconductor manufacturing facilities at the Kulim Hi-Tech Park in Kedah. (The Edge)

Zetrix AI Bhd’s managing director Wong Thean Soon, better known as TS Wong, has continued to sell down his shareholding, further reducing his stake in the company. (The Edge)

IOI Properties Group Bhd is eyeing a 50% stake in One Raffles Place, an integrated commercial development in Singapore’s central business district. (The Edge)

MN Holdings Bhd has secured a RM293.88 million contract to build two high-voltage power facilities for a data centre development in the central region of Peninsular Malaysia. (The Edge)

Swift Energy Technology Bhd said it has secured a contract to engineer and supply a 11kV substation for a gas compression plant in Johor, marking its first engineering, procurement, construction, and commissioning (EPCC) project. (The Edge)

Kinergy Advancement Bhd has secured a RM47.5 million subcontract from Gamuda Bhd's unit for electrical works at a hyperscale data centre in Bandar Spring Hill, Port Dickson. (The Edge)

iCents Group Holdings Bhd said it has secured a contract worth RM36.15 million to undertake engineering, procurement, construction and commissioning (EPCC) works for the turnkey development of a semiconductor wafer processing facility in Selangor. (The Edge)

Infomina Bhd's wholly-owned subsidiary, Infomina Jalan KK, has renewed its five-year software subscription and maintenance contract worth ¥855 million (about RM22.1 million) with Panasonic Digital Co Ltd. (The Edge)

LAC Med Bhd has secured a seven-year contract worth up to RM20 million to supply medical imaging equipment and related services to an upcoming specialist healthcare centre in Petaling Jaya, Selangor. (The Edge)

Malaysian Market Review. The FBM KLCI rebounded 7.44 points, or 0.46%, to 1,608.45 on Friday, from Thursday’s close of 1,601.01. Market breadth was positive with gainers leading losers, 627 vs 450. Budget 2027 was announced last Friday with numerous policy measures including but not limited to: minimum wage increases (+17.6% to RM2,000) and an increase in STR allocation to RM16bn from RM15bn. In general, Budget 2027 was interpreted as supportive for economic growth which helped buoy market conditions, counteracting recent foreign selling pressure. Construction (+2.30%), Transportation & Logistics (+1.19%), and Property (+1.18%) led gainers while Healthcare (-0.75%) and Energy (-0.09%) were the laggards.

Global Markets. Wall Street ended higher on Friday, with the Dow rising 423.31 points, or 0.83%, to 51,654.95, while the S&P 500 gained 0.59% to 7,811.51 and the Nasdaq advanced 0.64% to 27,366.17, as investors looked ahead to key inflation data this week. European markets also rebounded, with the STOXX Europe 600 gaining 0.97% as easing oil prices and bond yields provided some relief from recent inflation and monetary-tightening concerns. Asian markets were mostly firmer on Friday, with Hong Kong's Hang Seng rising 1.79% and China's Shanghai Composite edging 0.05% higher, while Japan's Nikkei 225 slipped 0.02%; South Korean markets were closed for a public holiday. Over the weekend, geopolitical risks intensified after a Houthi attack on Riyadh's international airport left at least 12 people dead and more than 300 wounded, prompting renewed warnings against travel through Saudi airports and weighing on Gulf equities. US Treasury markets are closed on Monday for Columbus Day, although US equity markets remain open.

Market Outlook. We expect the FBM KLCI to trade with a slight positive bias in the near term, supported by improving domestic sentiment following Budget 2027 and positive cues from Wall Street. Friday’s stronger market breadth also suggests buying interest has broadened beyond a handful of index heavyweights, which could support further selective upside. Nevertheless, gains may be capped by persistent foreign selling and geopolitical tensions in the Middle East, particularly if they trigger another rise in crude oil prices or global bond yields. Overall, we expect the KLCI to remain supported above recent lows, with trading likely to stay selective as investors balance domestic policy catalysts against external macro and geopolitical risks.

Sector focus. Consumer stocks may attract buying interest from higher cash aid, tax cuts and one-off payments. Banks could benefit mildly from loan growth, supported by RM57bn in guarantee schemes and an additional RM5bn BNM SME facility. Property developers may gain from stamp-duty relief for first homes priced up to RM750k.

Technical Commentary: The FBM KLCI had a pause in its losing streak, bouncing 7.44 points or 0.46% to close at 1,608.45, trading just above the psychological 1,600 level, which is now the key support. The index remains well below all key moving averages, showing that the market remains weak. The growing gap between the current price and these averages also suggests that there is still no clear sign of where the market may find support. The index remains vulnerable to further downside, with 1,600 as the key near-term support. A decisive break below this level could open the way towards 1,580, while any rebound is likely to face selling pressure. The outlook would improve only if the index reclaims the 1,625–1,650 range; until then, the bias remains bearish.

Company News

Genting Bhd plans to raise RM1.25 billion through a renounceable rights issue to repay maturing debt and fund working capital. (The Edge)

IOI Properties Group Bhd chief executive officer Datuk Lee Yeow Seng said the group is in talks for a secondary listing on the Singapore Exchange (SGX). (The Edge)

PMB Technology Bhd, a 58.78%-owned subsidiary of Press Metal Aluminium Holdings Bhd, plans to invest RM650 million to build a silicon-aluminium alloy plant in the Samalaju Industrial Park in Sarawak as the group seeks to diversify away from a struggling silicon metal business. (The Edge)

Unisem (M) Bhd and its subsidiary plan to invest RM396 million to expand its semiconductor manufacturing plant in Gopeng, Perak, as the group seeks to capture growing demand for advanced chip packaging used in artificial intelligence (AI) and data centres. (The Edge)

EP Manufacturing Bhd is partnering Beijing-listed Hebei Shichang Auto Parts Co Ltd to invest RM100 million in a new fuel tank manufacturing facility in Selangor to supply Proton Holdings Bhd. (The Edge)

Astral Asia Bhd is exploring the sale of 2,433 acres of land at the Kuantan Hi-Tech Park in Pahang to HNG Capital Sdn Bhd for RM233.57 million. (The Edge)

Brothers Datuk Seri Nazir Hussin Akhtar Hussin and Datuk Wira Mubarak Hussain Akhtar Husin have voluntarily gone on garden leave from their executive roles at Avangaad Bhd amid an investigation into their personal business interests. (The Edge)

Hektar Real Estate Investment Trust has terminated its proposed RM26 million acquisition of a 90% stake in Terramark Sdn Bhd, citing the sellers’ failure to fulfil several key conditions precedent. (The Edge)

Ahmad Zaki Resources Bhd has reached an amicable settlement with AmBank (M) Bhd and AmBank Islamic Bhd, which had filed civil suits against the group and its subsidiary over a combined RM69.3 million in outstanding payments owed by the unit. (The Edge)

·   The Industrial Production Index (IPI) accelerated to +5.0% YoY in August (Jul: +4.7%), driven by firmer manufacturing and electricity output.

·   Global demand and resilient domestic activity should support manufacturing, although rising headwinds could weigh on growth in 2027.

·   The unemployment rate improved to 2.9% in August (Jul: 3.0%), consistent with resilient domestic economic activity.

·   We maintain our GDP growth forecasts at +5.0% for 2026 and +4.5% for 2027.

·   We maintain our expectation for one 25-bp OPR hike to 3.00% in 2027.

Extended manufacturing strength  

IPI growth accelerated to +5.0% YoY in August (Jul: +4.7%), slightly above market expectations of +4.9%. The stronger print was driven by firmer manufacturing (+7.4%; Jul: +6.4%) and electricity output (+9.0%; Jul: +5.5%), partly offset by a deeper contraction in mining (-7.4%; Jul: -3.2%).

Manufacturing remained the key growth anchor, contributing +5.7ppts to headline IPI growth (Jul: +4.9ppts). The export-oriented cluster remained firm at +7.8% YoY (Jul: +7.7%), supported by “electric & electronic products” (+17.0%; Jul: +13.3%) and “machinery & equipment” (+13.0%; Jul: +10.7%), reflecting sustained global tech demand. Meanwhile, the domestic-oriented cluster strengthened to +5.3% (Jul: +4.7%), driven by “food processing products” (+5.7%; Jul: +6.7%) and “basic metals” (+9.4%; Jul: +8.6%).

Maintain positive growth outlook

We expect manufacturing activity to remain underpinned by sustained global semiconductor demand amid the AI-driven tech upcycle. Resilient domestic demand should further support the domestic-oriented segment, with Budget 2027 measures including cash assistance, higher minimum wages and tax cuts providing additional support to household spending. However, prolonged geopolitical tensions, volatile global trade policies, a high base effect and elevated business costs could weigh on growth momentum into 2027. We maintain our GDP growth forecasts at +5.0% YoY for 2026 and +4.5% for 2027.

Labour market remains steady

Malaysia’s unemployment rate improved to 2.9% in August (Jul: 3.0%), consistent with the resilient domestic economic expansion. The number of unemployed declined to 511.6k (Jul: 520.3k), which marks the first improvement since the outbreak of Middle East tensions in March. Employment also increased 0.2% MoM (Jul: +0.1%), suggesting firm labour demand. Meanwhile, the labour force rose by 0.1% to 17.39m (Jul: 17.37m).

Maintain expectation for OPR hike in 2027

We expect job creation to remain supported by steady household consumption, tourism spending, investment pipelines and robust industrial activity, particularly in the export-oriented segment. Nonetheless, the increase in the minimum wage to RM2,000 effective June 2027 could add to existing business cost pressures and weigh modestly on hiring. Overall, labour market conditions should remain broadly resilient. We maintain our expectation for one 25-bp OPR hike to 3.00% in 2027.

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.

The Surprise Is on Wages. The minimum wage will rise to RM2,000 from RM1,700 (+17.6%) from June 2027, the top end of our RM1,800–2,000 range, benefiting more than 4m workers. Micro, Small and Medium Enterprises (MSMEs) with annual sales below RM50m are exempted. A new RM2,500 monthly wage floor for semi-skilled workers and graduates was also announced, while GLICs and GLCs will raise their living-wage benchmark to RM3,400 from RM3,100. This is a direct cost headwind for labour-intensive sectors, mainly plantation and construction, from 2H27.

More Handouts, Lower Personal Taxes. The STR/SARA allocation rises to RM16bn (2026: RM15bn), slightly below our RM17bn expectation. SARA is raised to up to RM150 a month for 9m STR recipients, and two RM100 SARA MADANI payments are extended to 13m non-STR adults. More notably, resident individual tax rates are cut by 1ppt to 18% (RM70k–100k) and 24% (RM100k–150k), and individual relief is raised to RM12,000 from RM9,000, its first review since 2010. Together, these add up to RM1,600 of disposable income for c.5m taxpayers, while income above RM1m will be taxed at 30%. One-off payments of RM1,500 to 1.3m civil servants and RM750 to over 1m retirees add a further c.RM2.7bn.

No New Broad-Based Taxes. The speech introduced no new broad-based taxes and no carbon-tax start date. No changes to sin taxes or the SST scope were announced in the speech, although we will check the Finance Bill and annexes for details. For businesses, the MSME income tax rate is cut by 1ppt to 14% on the first RM150k and 16% on RM150k–600k. Manufacturers may now reclaim sales tax on locally purchased machinery and selected raw materials, and Accelerated Capital Allowances on local machinery and ICT are extended to 2030. The Reinvestment Allowance is under review.

Infrastructure: Continuity, With Contractor Relief. The government agreed to implement the Johor Bahru e-ART, and ECRL Phase 1 is set to begin operations in December. Other allocations include RM3.3bn for Sabah and Sarawak roads, RM5.7bn under MARRIS and RM2.5bn for federal road maintenance. Prasarana will invest over RM3.4bn to overhaul its rail services, and 42 new ETS and KTM Komuter train sets will be procured. The Variation of Price (VOP) clause for diesel and bitumen is reintroduced, and procurement reserved for G1–G4 Bumiputera contractors rises to RM7.5bn (2026: RM4.0bn). There was no update on MRT3 or the Penang LRT CMC2 package.

Energy Transition: Grid Yes, Storage Incentive No. TNB will invest RM15bn to strengthen the national grid. UEM Lestra will invest RM1bn, including a storage project at KLIA and a 1GW hybrid energy project in Johor, and a RM1.5bn centralised solar park will be built for government buildings. The Investment Tax Allowance of up to 100% for green technology projects is extended to 2030. However, there was no standalone storage incentive, no mention of SuRIA Home and no detail on the permanent AFA mechanism.

Neutral Market Impact. We view Budget 2027 as Neutral for equities. It is fiscally disciplined and supportive of consumption, but the RM2,000 minimum wage is an earnings headwind for labour-intensive sectors that the household measures do not offset at the corporate level. We maintain our end-2026 FBM KLCI target of 1,770 and our barbell strategy. This pairs structural-growth themes (AI, semiconductors, data centres and energy infrastructure) with earnings-resilient domestic names, while avoiding labour-intensive companies with limited pricing power.

Sector Highlights. Key beneficiaries are: (i) consumer, from higher cash aid, personal tax cuts and one-off payments concentrated around Aidilfitri and National Day; (ii) property, as first-home stamp-duty relief is extended to homes up to RM750k; (iii) technology, from c.RM3.4bn of Khazanah, KWAP and NIMP-linked capital for semiconductors and other high-value manufacturing; and (iv) power and renewable energy, from TNB's RM15bn grid investment, the extended green ITA and the government solar park. Conversely, plantation and construction face a minimum-wage headwind, partly cushioned by elevated CPO prices and the reintroduced VOP clause respectively.

Malaysian Market Review. The FBM KLCI fell 10.77 points, or 0.67%, to 1,601.01 on Thursday, from Wednesday's close of 1,611.78, with market breadth remaining negative as losers led gainers 813 to 378. Selling pressure persisted as the benchmark extended its decline, with sentiment weighed down by a renewed surge in crude oil prices amid growing concerns over a potential escalation between the US and Iran. Persistent foreign selling, with foreign investors having been net sellers for 10 consecutive trading days as of Wednesday, further limited the market's ability to absorb external shocks, keeping investors defensive and cautious ahead of the tabling of Budget 2027 on Friday., Technology (-2.05%), Telecommunications & Media (-1.78%) and Finance (-1.00%) led the laggards whereas Energy (+0.04%) was the only gainer. 

Global Markets. The Nasdaq slid 1.25% to 27,193.34 on Thursday as new details about OpenAI’s revenue spooked investors and put the AI trade under pressure, while the S&P 500 declined 0.47% to 7,765.36 and the Dow added 51.77 points, or 0.1%, to 51,231.64. Oracle fell more than 5%, with Nvidia and AMD losing nearly 3% and almost 4% respectively. Oil prices spiked on US-Iran headlines before easing off highs, with Brent up 3.9% to $104.13, while Treasury yields eased from fresh 24-year highs after a solid 30-year auction. Meanwhile, Europe's STOXX 600 dropped 0.75% to 625.51, weighed down by elevated bond yields and a renewed surge in crude oil prices amid growing US-Iran escalation concerns. Asian markets traded broadly lower on Thursday, with South Korea's KOSPI falling 2.62%, Japan's Nikkei 225 sliding 1.42% and Hong Kong's Hang Seng dropping 1.43%, as risk sentiment was dampened by higher oil prices, geopolitical tensions in West Asia and elevated US Treasury yields. (CNBC) 

Market Outlook. Higher energy prices are keeping inflation elevated and forcing the Fed to lean towards further rate hikes, leaving yields and oil as the key drivers of equity volatility. Although equities have been resilient, further upside in long-end yields could bring more significant headwinds, and a higher-for-longer rate environment looks set to persist. We stay cautious on near-term global risk appetite, as the AI trade is showing signs of strain and oil remains sensitive to US-Iran headlines. The FBM KLCI is expected to remain volatile in the near term, with oil price movements, foreign fund flows and developments in US-Iran tensions likely to outweigh domestic catalysts ahead of Budget 2027. We stay cautious to conservative on the local bourse, as persistent foreign selling, elevated crude oil prices and geopolitical uncertainty are likely to cap any rebound, with Friday's Budget 2027 the next key event to watch for fresh direction.

Sector focus. Energy counters may extend their gains, supported by firm crude oil prices amid escalating US-Iran tensions. Conversely, Finance and Technology may stay under pressure as elevated US Treasury yields and persistent foreign selling continue to weigh on rate-sensitive and heavyweight counters.

Technical Commentary: The FBM KLCI extended its losing streak, falling 10.77 points or 0.67% to close at 1,601.01, edging closer to the psychological 1,600 level, which is now the key support. The index remains well below all key moving averages, showing that the market remains weak. The growing gap between the current price and these averages also suggests that there is still no clear sign of where the market may find support. Should 1,600 fail to hold, the index risks sliding towards 1,580 and beyond, with current price action showing little evidence of stabilisation. Any recovery attempts continue to face selling pressure, and until the index can clearly reclaim 1,625–1,650, the broader trend is likely to remain weak and tilted to the downside. 

Company News 

SD Guthrie Bhd has resolved its five-year legal dispute with the Penang Development Corporation (PDC) involving the compulsory acquisition of the group's lands in Byram Estate, Seberang Perai Selatan, following a settlement between the entities. (The Edge)

Dagang NeXchange Bhd has reached a global settlement with its Chinese partner Tethystronics Technologies Co Ltd (TTCL) over disputes involving semiconductor foundry SilTerra Malaysia Sdn Bhd, paving the way for a RM100 million investment in DNeX’s semiconductor holding company. (The Edge)

Batu Kawan Bhd’s unconditional mandatory takeover offer for MKH Bhd closed on Thursday with the group's stake in the property developer rising to 96.73%. (The Edge)

MISC Bhd has secured long-term charter contracts for five new liquefied natural gas (LNG) carriers from PETRONAS LNG Ltd, an indirect unit of Petroliam Nasional Bhd (PETRONAS). (The Edge)

Exsim Hospitality Bhd has secured a RM15.6 million subcontract from a unit of Nestcon Bhd for the supply and installation of building services and general building works. (The Edge)

GDB Holdings Bhd is expanding its construction business through the proposed acquisition of two companies, while diversifying into property development to broaden its earnings base. (The Edge)

Cyberjaya Education Group Bhd is acquiring 24,777 sq m of vacant freehold commercial land in Sepang for RM15 million in cash to support its university’s expansion and future student facilities. (The Edge)

Life Water Bhd is acquiring an industrial property in Kota Kinabalu for RM15 million to accommodate its business expansion. (The Edge)

MTAG Group Bhd is proposing to acquire two label manufacturers for an indicative RM13.8 million in cash to expand its product offerings and customer base. (The Edge)

UWC Bhd has dropped its plan to use part of the proceeds of its newly proposed RM384.13 million private placement to pay off borrowings, choosing instead to redirect the amount towards factory expansion and working capital. (The Edge)

Al-`Aqar Healthcare REIT has lodged two sukuk programmes to fund investments, refinance Islamic financing and meet working capital requirements. (The Edge)

Malaysian Market Review. The FBM KLCI fell 21.57 points, or 1.32%, to 1,611.78 on Wednesday, from Tuesday's close of 1,633.35, with market breadth turning negative as losers led gainers 663 to 492. Selling pressure intensified as the benchmark broke below key support levels, led by heavy selling in banking stocks following JPMorgan’s downgrades of CIMB and AMMB, alongside concerns over elevated bond yields. Sentiment was further weighed by weaker regional markets and renewed gains in crude oil following Houthi attacks in Saudi Arabia, keeping investors defensive and cautious on the inflation and monetary easing outlook ahead of the tabling of Budget 2027 on Friday. Construction (+1.22%) and Technology (+1.12%) topped the gainers, while Finance (-2.65%) and Healthcare (-2.46%) led the laggards.

Global Markets. U.S. equities fell on Wednesday as pressure built in the bond market, with the Dow losing 341.41 points, or 0.66%, to 51,179.87, the S&P 500 shedding 0.22% to 7,801.77, and the Nasdaq slipping 0.22% to 27,538.69. The 10-year Treasury yield hit 5.365%, its highest since April 2002, though it pared gains after a solid $39 billion auction, while minutes from the Fed's September meeting showed most officials expect another rate increase by year end. Bank and technology stocks led the declines on fears that higher rates would hinder lending and the AI buildout. Meanwhile, Europe's STOXX 600 dropped 1.00% to 630.25, weighed down by elevated bond yields and renewed gains in crude oil following Houthi attacks in Saudi Arabia. Asian markets traded broadly lower on Wednesday, with South Korea's KOSPI falling 1.98%, while Japan's Nikkei 225 fell 0.92% and Hong Kong's Hang Seng dropped 0.62%, as sentiment was dampened by renewed West Asia supply concerns. (CNBC) 

Market Outlook. With the Fed minutes pointing to another hike by year end and Treasury yields at multi-decade highs, the margin for error on earnings has narrowed, leaving equities vulnerable to further bond market pressure even though inflation expectations remain well anchored and a strong earnings season could still carry the market higher. We stay cautious on near-term global risk appetite, as the rally remains narrowly led by technology and rising borrowing costs threaten both financial and AI-linked names. For KLCI, attention will turn to Budget 2027 on Friday, which could provide fresh domestic catalysts, but elevated crude oil prices, geopolitical tensions in West Asia and high global bond yields are likely to keep investors defensive. We stay cautious to conservative on the local bourse, as the break below key support and persistent external headwinds are likely to cap any rebound until there is greater clarity from the Budget and from bond yield and oil price developments.

Sector focus. Construction and Technology counters may extend their gains, supported by selective buying and the government's focus on infrastructure, semiconductors and digitalisation ahead of Budget 2027 on Friday. Conversely, Finance may stay under pressure as elevated US Treasury yields and persistent foreign selling continue to weigh on rate-sensitive and heavyweight counters.

Technical Commentary: The FBM KLCI tumbled 21.57 points or 1.32% to close at 1,611.78. The index has decisively broken below 1,625, confirming that the downtrend remains intact, while price continues to trade well below all key moving averages. The 1,650–1,660 resistance zone remains well above the current level, highlighting the significant distance needed to challenge the downtrend. With 1,625 now broken, the index is exposed to the psychological 1,600 level, with a break below potentially opening the way towards 1,580. Unless the index quickly reclaims 1,625–1,650, the bearish outlook is likely to persist. 

Company News 

Yinson Azalea Production Pte Ltd, an indirect wholly-owned subsidiary of Yinson Holdings Bhd, said it has officially priced US$1.46 billion (RM6.21 billion) in senior secured notes for its Agogo floating production, storage and offloading (FPSO) vessel. (The Edge)

Northern Solar Holdings Bhd  has secured a RM34 million engineering, procurement, construction and commissioning (EPCC) contract to develop a 9.5MW large-scale solar photovoltaic plant. (The Edge)

Aemulus Holdings Bhd has secured new orders worth US$3.86 million (RM15.77 million) from an undisclosed Singapore customer for test systems used in the data centre and artificial intelligence (AI) market. (The Edge)

Datasonic Group Bhd has terminated its proposed acquisition of a RM28.5 million industrial property in Petaling Jaya after failing to get Fire and Rescue Department approval for fire safety equipment. (The Edge)

CIMB Group Holdings Bhd, Malaysia’s second-largest lender by assets, fell to its lowest in three months as banking stocks fell amid persistent concerns over rising bond yields. (The Edge)

Bursa Malaysia has approved PJBumi Bhd’s proposed share split, expected to boost trading liquidity and attract a broader investor base by lowering trading prices. (The Edge)

Bursa Malaysia has dismissed MMM Group Bhd’s appeal against the rejection of its proposed regularisation plan, paving the way for the company to be delisted on Oct 12. (The Edge)

• 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.

Economics Highlights

A Mildly Expansionary Budget, With Fiscal Discipline Intact

Budget 2027, the fifth MADANI Budget and second under the 13th Malaysia Plan, is expected to balance three objectives: supporting households, strengthening Malaysia's growth capacity and maintaining fiscal discipline. This is consistent with the Ministry of Finance's pre-budget framework, which prioritises productivity and innovation, energy transition, food security, digitalisation and AI, high-skilled talent, social protection and better public-sector delivery.

We expect the Budget to remain mildly expansionary, but measured. Our in-house estimates point to revenue of RM383.3bn in 2027, up 5.5% YoY, while operating expenditure is expected to rise 4.6% to RM378.4bn. Gross development expenditure is projected at RM82.4bn, versus RM80.0bn in 2026E. This should narrow the fiscal deficit to RM76.0bn, or 3.3% of GDP, from 3.5% in 2026E.

The key message for investors is that Budget 2027 is unlikely to change the market's direction by itself. Instead, it should reinforce several investment themes already in place. We expect the earnings impact to be concentrated in infrastructure, energy transition, technology and selected domestic-demand beneficiaries. 

Household Support: Cushion, Not Stimulus

The Government is likely to maintain targeted assistance as a key pillar of the Budget. We expect the combined STR/SARA allocation to increase to around RM17bn from RM15bn in 2026. This should provide a direct buffer for lower- and middle-income households and support mass-market consumption. However, the scale of support will be constrained by the higher fiscal burden from energy subsidies.

Wages: Positive for Purchasing Power, Negative for Labour Costs

The current minimum wage of RM1,700 remains below the RM3,100 Living Wage benchmark adopted by GLICs and GLCs. We expect Budget 2027 to potentially signal or announce an incremental increase, with RM1,800–2,000 a reasonable range to watch. For consumers, higher wages should support purchasing power; for labour-intensive sectors such as construction, plantation and parts of consumer, the impact is a direct cost headwind.

Tax Policy: Refinement Rather Than a Tax Shock

We do not expect major new broad-based taxes. Instead, the key areas to watch are the incorporation of selected GST features into the SST framework, broader SST exemptions, wider e-invoice adoption and greater clarity on the carbon-tax timetable. The Government's pre-budget statement also emphasises improving tax compliance, reducing leakages and ensuring better value from public spending.

Moving Up the Value Chain

The 'Made by Malaysia' ambition should translate into continued support for home-grown companies, R&D, technology commercialisation, growth-stage financing and local supply-chain development. Strategic sectors identified by the Government include semiconductors, AI, digital services, energy transition, pharmaceuticals, logistics and aerospace.

Market Implication

KLCI: Supportive, But Not a Re-rating Event

Budget 2027 should be mildly positive for the FBM KLCI, but we do not expect a broad-based re-rating. Fiscal consolidation remains the policy anchor, while the expected increase in development expenditure is modest. The earnings impact should therefore be concentrated in selected sectors. We maintain our end-2026 FBM KLCI target of 1,770.

Domestic Demand: Supported, But Still Selective

Higher STR/SARA allocations should cushion mass-market spending, particularly for essentials and affordable consumption. However, weaker consumer confidence, elevated living costs and potential wage and subsidy changes should keep discretionary spending selective. We therefore remain Neutral on Consumer rather than treating higher cash assistance as a sector-wide earnings catalyst.

Fiscal Consolidation: Quality of Spending Matters

The rise in development expenditure to RM82.4bn is constructive, but the quantum does not point to a new fiscal stimulus cycle. The key market question is how quickly allocations translate into tenders, awards and project execution. This favours contractors with visible order books and strong execution capability.

Structural Growth: Budget Reinforces, Rather Than Creates, the Cycle

The technology and data-centre investment cycle is already underway. Budget support for semiconductors, IC design, advanced packaging, AI adoption and talent would reinforce the cycle, but the bigger earnings drivers remain customer demand, capacity expansion and order-book conversion. We therefore retain Overweight on Technology.

Energy: The Link Between Data Centres and the Power System

The data-centre boom is increasing the importance of grid capacity, transmission, firm renewable power and storage. We will focus on whether Budget 2027 extends GITA/GITE to storage, continues rooftop-solar support, clarifies the AFA mechanism and provides a path for energy-transition investment. A standalone storage incentive would be a clear upside surprise.

Sector Rotation: From Budget Beta to Earnings Delivery

We expect the Budget to favour companies with visible earnings transmission rather than broad Budget beta. Construction and Energy & Utilities offer the clearest direct policy read-through, while Technology remains the strongest structural-growth theme. Property and Consumer should benefit selectively. Plantation remains primarily a CPO-price and supply-demand story.

Sector Strategy

Consumer | NEUTRAL

STR/SARA support should remain a key consumption buffer, with the combined allocation potentially rising to around RM17bn. However, consumption is likely to remain selective as consumers face higher labour, food, energy and logistics costs. Minimum wage, sin taxes and further subsidy rationalisation remain the main policy risks. We prefer essential and affordable-consumption exposure. 

Construction | OVERWEIGHT

Budget 2027 should be a continuity budget rather than a fresh stimulus cycle. The existing pipeline across Penang LRT, Johor E-ART, MRT3, highways, water and East Malaysia connectivity already provides a multi-year runway. The key catalysts are contract awards, tender outcomes, funding progress and execution. Data centres provide an additional structural demand pool, with 3.8GW of committed capacity still to be built and an estimated RM76–95bn of remaining contract value in the latest sector work. 

Technology | OVERWEIGHT

AI-exposed test and equipment names remain the strongest performers, while Penang checks point to strong AI-driven demand into 2027–28. Capacity, inputs and talent are now the key constraints. Budget 2027 should extend targeted semiconductor, AI and talent support, including IC design, advanced packaging, R&D and digital infrastructure. The Budget should reinforce the structural AI/semiconductor cycle rather than initiate it. 

Energy & Utilities | OVERWEIGHT

The key Budget watch points are storage incentives, GITA/GITE eligibility, SuRIA Home, the permanent AFA mechanism and carbon-tax timing. We expect support for storage, given LSS6's battery requirement, while carbon-tax implementation could be deferred. The biggest upside surprise would be a standalone storage incentive, which would most directly benefit SLVEST and SAMAIDEN. TENAGA remains a key beneficiary of regulated grid capex and data-centre connections. 

Property | OVERWEIGHT

Budget 2027 should focus on implementing existing housing policies rather than introducing a broad new reform package. First-home stamp-duty relief, SJKP, affordable housing and Rent-to-Own/shared-ownership schemes should remain supportive. The National Housing Policy 2026–2035 and RMK13 target of one million affordable homes provide a longer-term framework. Penang LRT, RTS, ECRL, MRT3 and JS-SEZ should provide infrastructure-led demand. 

Plantation | OVERWEIGHT

Budget measures are likely to focus on independent smallholders, replanting support and MSPO certification. These are positive for long-term industry productivity but should have limited direct earnings impact on large listed planters. The key near-term earnings risk is minimum wage, given the sector’s high labour intensity, although elevated CPO prices should provide some offset. A review of the WPL threshold or structure could provide additional cost relief. Our core investment thesis remains elevated CPO prices and potentially tighter supply, with CPO price forecasts at RM4,500/tonne for CY26 and RM4,700/tonne for CY27. 

What Could Move the Market on Budget Night?

• Development expenditure materially above RM82.4bn: Positive for construction and infrastructure-linked names, particularly if accompanied by clearer project funding and award timelines.

• Stronger-than-expected storage and grid support: A clear positive for solar EPCC, storage and grid-related companies.

• New semiconductor and AI incentives: Positive if targeted at IC design, advanced packaging, R&D, talent and local technology ownership rather than broad untargeted grants.

• Larger household support: Positive for mass-market consumption, but the earnings impact should be assessed against labour and operating-cost inflation.

• Minimum wage above RM2,000: Negative surprise for labour-intensive sectors and consumer operators with limited pricing power.

• Broad new taxes or aggressive subsidy rationalisation: Negative surprise for domestic demand and corporate margins.

• Clearer tax/refund mechanisms: Measures that reduce the cascading burden under SST or improve business compliance efficiency could be mildly positive for corporate sentiment.

Strategy

Entering 4Q26, we expect volatility to remain elevated, with markets facing a challenging external backdrop of higher oil prices, persistent Middle East geopolitical risks and a higher-for-longer interest-rate environment. Domestically, political uncertainty ahead of GE16 and the potential KLCI expansion could add to near-term positioning and index-related overhang.

Against this backdrop, we maintain a barbell strategy, balancing structural-growth themes such as AI, semiconductors, data centres and energy infrastructure with earnings-resilient companies that can withstand macro volatility and benefit from targeted domestic support.

We believe stock selection will remain key, rather than taking broad exposure to Budget beneficiaries. Construction and Energy & Utilities offer the clearest policy read-through, Technology remains our preferred structural-growth theme, while Property and Consumer offer selective opportunities. Plantation remains primarily a CPO-price story. We maintain our end-2026 FBM KLCI target of 1,770.

Malaysian Market Review. The FBM KLCI rose 1.60 points, or 0.10%, to 1,633.35 on Tuesday, from Monday's close of 1,631.75, with market breadth turning positive as gainers led losers 667 to 456. Buying interest was seen in telecommunications and commodity-related counters, with trading activity broadening to selected small-cap names, as sentiment was supported by Wall Street's technology-led rally and easing crude oil prices, although elevated US Treasury yields continued to temper risk appetite ahead of the tabling of Budget 2027 on Friday. Technology (+3.12%) and Healthcare (+3.04%) topped the gainers, while Finance (-0.38%) and Property (-0.29%) led the laggards.

Global Markets. The S&P 500 rose to a fresh all-time intraday high on Tuesday, boosted by gains in key technology names and a decline in Treasury yields, climbing 0.58% to a record close of 7,818.93, while the Dow gained 0.49% to 51,521.28, and the Nasdaq added 0.45% to a record close of 27,599.79. Chipmakers led the advance, with Marvell Technology popping 5.8%, Broadcom advancing 3.7% and Advanced Micro Devices gaining nearly 3%, while oil prices ended little changed, with Brent crude settling 0.76% higher at c.$101.08 a barrel. The 10-year Treasury yield fell 3 basis points to 5.286%, while the 30-year yield was little changed at 5.655%, both easing from levels not seen since 2002 reached on Monday. Meanwhile, Europe's STOXX 600 rose 0.48% to 636.63, supported by easing oil prices and selective buying in defensive counters. Asian markets traded mixed on Tuesday, with South Korea's KOSPI falling 0.89% as investors booked profits in chipmakers following recent gains, while Japan's Nikkei 225 surged 1.05% on continued technology-led buying after Wall Street's overnight rally, and Hong Kong's Hang Seng gained 1.00%. (CNBC) 

Market Outlook. Investors are looking through inflation and oil concerns for now, with the market driven by momentum, earnings growth and AI investment, while attention turns to the minutes of the Fed's September meeting due Wednesday, which may shed light on the decision to raise rates. We stay cautious on near-term global risk appetite, as the rally remains narrowly led by technology and bond yields are still close to multi-decade highs, leaving equities vulnerable if the Fed's tone turns more hawkish. We stay cautious on the local bourse this week, as easing crude oil prices and Budget 2027 expectations may offer some support, but a stronger recovery will likely require fresh catalysts such as foreign fund inflows and clearer direction on bond yields and geopolitical developments.

Sector focus. Technology and Healthcare counters may extend their gains over the next few days, supported by continued selective buying in small-cap technology names and the government's focus on semiconductors and pharmaceuticals as strategic areas ahead of Budget 2027. Conversely, Finance and Property may stay under pressure after leading Tuesday's declines, as elevated US Treasury yields and persistent foreign selling continue to weigh on rate-sensitive and heavyweight counters

Technical Commentary: The FBM KLCI edged up marginally to close at 1,633.35 (+0.10%), but the move looks more like a temporary pause than a genuine recovery. The index remains below the 1,650–1,660 resistance zone and all key moving averages, while the descending trendline continues to cap gains, suggesting weakening buying interest. Support at 1,625 looks increasingly fragile, and a break below would leave the index exposed to a slide toward the psychological 1,600 level and potentially deeper toward 1,580. The index needs to clearly break above 1,650–1,660 to show that the current downtrend may be weakening. Until then, the market is more likely to continue moving lower rather than start a strong recovery. 

Company News 

CIMB Group Holdings Bhd is exploring a sale of its business in the Philippines as part of efforts to streamline and focus on bigger markets for growth, according to people with knowledge of the matter. (The Edge)

Zetrix AI Bhd said the exact amount it owes the Road Transport Department (JPJ) is still being finalised between the two parties, a day after Transport Minister Anthony Loke Siew Fook said the company had accumulated RM314 million in unpaid remittances. (The Edge)

Top Glove Corporation Bhd said labour shortage remains a primary constraint in scaling up production as it seeks to capture rising global demand following its best year since 2021. (The Edge)

Samaiden Group Bhd said its contracts to undertake works for a 99.99-megawatt (MW) Large Scale Solar 5+ (LSS5+) project are worth RM238 million. (The Edge)

Mesiniaga Bhd has won a RM32.3 million contract from the Royal Malaysian Customs Department (RMDC) for the maintenance and licence renewal of its MyGST System. (The Edge)

Scientex Bhd is acquiring 503 acres in Pulai, Johor, for RM580 million to boost the property developer’s land bank. (The Edge)

Dialog Group Bhd said its 50.01%-owned joint venture company has been awarded concession rights and operatorship for the L8/66 exploration block onshore Thailand. (The Edge)

Elridge Energy Holdings Bhd is investing RM45 million to venture into the manufacturing and sale of activated carbon business for use across water treatment, industrial purification and related filtration. (The Edge)

Insights Analytics Bhd, which mainly provides asset management systems to water utilities, has secured a RM14.44 million subcontract to construct a water treatment plant in Sarawak's Miri division. (The Edge)

Building construction contractor SLGC Bhd ended its first trading day on the ACE Market below its initial public offering (IPO) price. (The Edge)

• 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.

Visit to Penang tech companies

We organised a Penang tech visit in September covering five companies across the value chain in engineering & support services (3Ren - NR), equipment distribution & manufacturing (QES - BUY; TP: RM0.75), raw & semi-finished materials (AMS - NR), Automated Test Equipment (Mi Technovation - BUY; TP: RM6.38) and precision machining & components (AmBest - NR). 

We walked away from the visit with greater clarity on the ground conditions of Malaysia’s semiconductor industry and stronger conviction in the sustainability of the current AI upcycle. More importantly, the visit reinforced our view that Malaysia has yet to fully capture the dividends from the global AI upcycle. The visit also deepened our understanding of the key bottlenecks facing the industry and the policy measures needed to further strengthen Malaysia’s competitiveness in the global semiconductor landscape.

Semiconductor landscape overview

The advancement of AI has driven a global race towards increasingly powerful chips, with a focus on smaller process nodes to improve computing performance. This structural trend has created significant opportunities in the global semiconductor industry along with its supporting ecosystem. The complexity of high-performance chips, such as GPUs, and the need to integrate them with high-bandwidth memory (HBM) have increased the importance of advanced packaging.

There are broadly three core stages in the semiconductor value chain: IC design, wafer fabrication, and assembly, testing and packaging (ATP) (Figure 1). IC design and wafer fabrication form the front end of the value chain, representing the most technology- and R&D-intensive segments. These activities are concentrated among a handful of leading semiconductor economies, reflecting high barriers to entry as incumbent players benefit from years of technological know-how and intellectual property that cannot be replicated overnight. 

ATP represents the back end of the semiconductor value chain, involving the assembly, testing and packaging of chips before they are integrated into electronic products. ATP is Malaysia’s stronghold, accounting for 13% of global ATP activity. It is worth noting that Malaysia has also developed capabilities across the broader supporting ecosystem, spanning semiconductor equipment, engineering, materials and others. Coupled with potential in advanced packaging, Malaysia could capture a greater share of the semiconductor upcycle dividend.

Key thoughts from Penang Visit

1.The current AI upcycle is different 

Most tech company management teams acknowledged that the key question of how long the current AI upcycle will last remains uncertain, and are therefore focused on capitalising the opportunity by optimising production capacity. Nevertheless, the consensus is that the upcycle remains in its early stages. This is evident from healthy orderbook growth across all five companies we visited, with several already fully booked and deliveries extending into 2027, while some are planning capacity as far out as 2028. With demand outstripping capacity, some companies are rationing orders, with one management describing its capacity as “up to the neck”.

Notably, one company described the AI upcycle as structural rather than a normal three-year inventory cycle. We broadly agree. Instead of a one-off build-up in semiconductor inventories, AI is creating a multi-layered demand cycle. The initial phase includes building computing infrastructure to train AI models, which drives demand for chips. As AI moves towards inference and increasingly specialised applications, demand for computing, memory and data-centre infrastructure will broaden further. This is consistent with McKinsey’s expectation for inference-server demand to grow at a 35% CAGR from 2025 to 2030 (Figure 2). Another structural trend is the wider adoption of AI by firms and consumers, creating sustained demand for computation. 

  2. Evidence of trade diversion 

We observed evidence that Malaysian companies are direct and indirect beneficiaries of the China+1 strategy and trade diversion arising from US-China trade tensions. Chinese companies seek access to major export markets but face increasing trade restrictions, creating an incentive to establish alternative manufacturing bases outside China. During our visit, we saw Malaysian companies collaborating with Chinese partners via JVs, with a significant portion of production being carried out in Malaysia and the new products marketed under Malaysian brands. 

It is worth nothing that these arrangements involve more than transshipment through Malaysia. Companies are planning to localise content and labour, including meeting certificate-of-origin requirements with the relevant Malaysian authorities. This suggests Malaysia’s neutral position has helped capture the benefits of trade diversion through increased local production, investment and the development of technology capabilities. 

  3. Widespread talent shortages in the industry 

One of the consistent pieces of feedback from management was the shortage of talent, particularly engineers. Companies reported an increasingly tight and expensive skilled labour market, with competition for talent intensifying as they ramp up production capacity. Local semiconductor players are also facing poaching pressure from larger multinational firms, which can offer higher salaries and greater work flexibility. Nonetheless, we view this as an increasing cost pressure for domestic players, rather than a constraint on capacity expansion.

On the positive side, the rapid expansion of the semiconductor industry is creating more demand for domestic engineering and technical talent, helping to alleviate Malaysia’s long-standing issue of graduate underemployment. Skill-related underemployment remains elevated, with 35.2% of employed workers with tertiary education working in semi- or low-skilled jobs in 2Q26 (Figure 3). This underscores the importance of moving up the value chain to create more high-skilled jobs. 

  4. Moving up the value chain requires more than capability

Malaysia has a well-established OSAT industry and supporting ecosystem, but its development in higher-value segments remains nascent. Based on our engagement with industry players, we believe there are two key constraints to moving up the value chain. Firstly, the semiconductor industry is highly sophisticated, with upstream customers prioritising product quality, reliability and a proven track record. For local players, investing in R&D to develop new products carries considerable risk, as it remains uncertain whether the products will meet their clients’ qualification requirements. Thus, local players tend to focus on sharpening their capabilities in their respective areas of specialisation, rather than venturing into new areas.

Secondly, the semiconductor ecosystem tends to develop along the value chain in close proximity. Taiwan is a case in point, with its strong wafer fabrication base supporting the development of an adjacent advanced packaging industry. Malaysia’s lack of a comparable front-end anchor could present an additional barrier to developing higher-value activities such as advanced packaging. That said, Intel’s US$7bn investment in Malaysia, including high-end 3D packaging in Penang, is a positive step towards moving Malaysia into higher-value segments.

Malaysia does not fully capture the benefits of E&E upcycle

Malaysia’s concentration in the lower-value segments of the semiconductor value chain means that we cannot fully capture the broader tech upcycle dividend. E&E accounts for 40% of Malaysia’s gross exports, but contributes only 7.4% of GDP. More importantly, domestic value-added accounts for just 48% of Malaysia’s E&E exports, among the lowest across major E&E economies (Figure 4). This means that more than half of the value embedded in Malaysia’s E&E exports is generated from foreign inputs and activities, underscoring the relatively low domestic value captured despite its robust export headline.

Policies in place to move up the value chain

We believe the National Semiconductor Strategy (NSS) provides the right policy framework for moving Malaysia up the semiconductor value chain. The NSS targets RM500bn of investments in Phase 1, with a focus on domestic investment in advanced packaging, IC design and advanced manufacturing equipment, alongside FDI in wafer fabrication. It also aims to train and upskill 60,000 high-skilled engineers and strengthen collaboration between industry, academia and Government in semiconductor R&D. 

To build a more complete, home-grown advanced packaging ecosystem in Malaysia, the Malaysia Advanced Packaging Consortium (MAPC) brings together five local champions with capabilities across IC design (SkyeChip – BUY; RM3.76), advanced packaging (FusionAP Sdn Bhd), OSAT (Inari – BUY; RM2.94), ATE (Pentamaster - NR) and high-precision assembly equipment (NSW Automation Sdn Bhd), with the initial objective of developing a local HBM4 advanced-packaging proof of concept. We believe successful execution of these initiatives could help address the constraints identified during our company visits.

Implications for the Economic Outlook

We now have stronger conviction that the AI upcycle will remain a steady growth driver over the next few years, supported by the wider adoption of AI and cloud computing, digitalisation and increasing AI applications. In our view, concerns over a sharp slowdown in AI-related demand and investment are overdone. For Malaysia, this should continue to support E&E exports, manufacturing activity and private investment, particularly through data-centre development and capacity expansion in the semiconductor industry.

However, we see 2027 as a year of stability rather than acceleration. While semiconductor demand and order pipelines should remain healthy, industry growth is likely to normalise following the strong performance this year. This is also consistent with feedback from the companies we visited, which are expanding capacity to meet sustained demand. However, they remain cautious about aggressive capacity expansion and hiring, given the risk of overcapacity when the cycle eventually turns. As such, we expect the AI upcycle to provide a steady support to Malaysia’s growth in 2027, rather than another leg-up in growth momentum.

In addition, the broader macro picture is likely to remain uneven. External demand and manufacturing should remain relatively resilient, but domestic demand is expected to moderate from the strong pace seen previously, while elevated cost pressures and geopolitical uncertainties could weigh on business sentiment. Moreover, Malaysia’s relatively low domestic value added in E&E means that strong gross export growth does not translate fully into stronger economy, given the industry’s reliance on imported capital goods and intermediate inputs.

The bigger opportunity lies beyond the near-term growth cycle. If Malaysia can successfully move up the semiconductor value chain, the benefits could extend beyond exports and investment to productivity, high-skilled employment and domestic value added. This could ultimately raise Malaysia’s potential growth over the longer term. In short, we see stability as the near-term theme, but greater value added as the longer-term upside.

We maintain our full-year 2026 GDP growth forecast at +5.0% YoY. For 2027, we project preliminary GDP growth of +4.5%, reflecting more moderate macroeconomic conditions.

Malaysian Market Review. The FBM KLCI edged up 0.88 of a point, or 0.05%, to 1,631.75 on Monday, from Friday's close of 1,630.87, although market breadth was slightly negative, with losers leading gainers 599 to 564. Investors largely stayed on the sidelines amid the absence of market-moving factors, with selective buying seen in technology and semiconductor-related counters, as participants remained cautious ahead of the tabling of Budget 2027 on Friday. Technology (+1.74%) and Healthcare (+1.43%) topped the gainers, while Construction (-1.46%) and Plantation (-1.39%) led the laggards.

Global Markets. The Nasdaq Composite sailed to a fresh all-time high on Monday as traders looked past rising U.S. Treasury yields, rising 1.05% to a record close of 27,477.31, while the S&P 500 climbed 0.66% to 7,773.95 and the Dow advanced 0.18%, to 51,267.90. AI-linked stocks led the gains, with SpaceX jumping more than 7%, Meta Platforms and Microsoft rising almost 2% and more than 1% respectively. The ISM services PMI came in at 54.9% in September, roughly in line with expectations, while Brent crude settled down to c.$100 a barrel and WTI fell to c.$89. Meanwhile, Europe's STOXX 600 rose 0.36% to 633.62, supported by easing oil prices and selective buying in defensive counters. Asian markets traded mixed on Monday, with South Korea's KOSPI closed for a holiday, while Japan's Nikkei 225 surged 2.40%. Hong Kong's Hang Seng edged up 0.28% following the previous session's sharp decline. (CNBC) 

Market Outlook. Attention now turns to the minutes of the Fed's September meeting, which may shed light on its decision to hike rates by a quarter point last month. While global equities have climbed around 12% year-to-date and remain just below all-time highs, we stay cautious, as the rally is narrowly led by tech and elevated bond yields remain a key risk if the Fed stays higher for longer. We stay cautious on the KLCI this week, as the absence of market-moving factors and the Budget 2027 tabling on Friday are likely to keep participants on the sidelines, with selective buying likely to continue but upside limited until greater clarity emerges on the Budget and external conditions such as bond yields and crude oil prices.

Sector focus. Technology counter may extend its gain, supported by continued selective buying in technology and semiconductor-related names amid gains in regional markets. Construction and Plantation could stay under pressure after leading Monday's declines, as investors remain on the sidelines and hold back from fresh positions ahead of the tabling of Budget 2027 on Friday.

Technical Commentary: The FBM KLCI rose slightly to close at 1,631.75 (+0.05%), but the small gain does little to improve the overall weak market outlook. The index remains below the 1,650–1,660 resistance zone and all key moving averages, keeping the near-term outlook weak. A break below this level would expose the index to a retest of the psychological 1,600 mark, with further downside risk if selling pressure intensifies. On the upside, the index is likely to face strong resistance at 1,650–1,660, where the descending trendline and moving averages converge. Until the index breaks above that zone convincingly, the market is still more likely to move lower, with the current rise looking more like a temporary pause than a real recovery.

Company News 

Transport Minister Anthony Loke Siew Fook told reporters that the suspension of Zetrix AI Bhd and subsidiary MyEG stemmed from RM314 million in unremitted Road Transport Department collections from May to September. (The Edge)

eJamin, an online bail payment system operated by a unit of Practice Note 17 company Pertama Digital Bhd, ran for five years without a formal contract, the Public Accounts Committee found. (The Edge)

Yinson Holdings Bhd has secured about US$600 million (RM2.5 billion) in additional firm contract backlog following an amendment to its contract for the FPSO John Agyekum Kufuor offshore of Ghana. (The Edge)

Kelington Group Bhd said its wholly owned unit has been awarded a second contract by a manufacturer operating in the Sama Jaya Free Industrial Zone in Kuching, Sarawak, worth about RM133 million. (The Edge)

Information technology solutions provider Go Hub Capital Bhd has secured a five-year service contract worth RM65 million from Keretapi Tanah Melayu (KTMB) unit Tenang Capital Bhd. (The Edge)

Citaglobal Bhd, via indirect unit LAWI Engineering GmbH (LAWI Germany), has secured a RM29 million share of a RM52.1 million contract for a waste-to-energy (WTE) project in Thailand. (The Edge)

West River Bhd has secured a RM17.5 million subcontract for electrical, security and solar panel system works at the E-Metro Logistic Park in Bandar Bukit Raja 2, Selangor. (The Edge)

Jati Tinggi Group Bhd has secured two contracts from Tenaga Nasional Bhd (TNB) worth a combined RM15.7 million. (The Edge)

IJM Corporation Bhd has appointed non-executive chairman of KPMG Malaysia Datuk Johan Idris as its independent non-executive director and chairman, effective Monday. (The Edge)

Datuk Clifford Hii Toh Leong has increased his stake in Asteel Group Bhd to 53.08% following the close of his unconditional mandatory takeover offer on Monday. (The Edge)

Malaysian Market Review. The FBM KLCI inched up 0.51 points, or 0.03%, to 1,630.87 on Friday, from Thursday's close of 1,630.36, with market breadth turned positive, with gainers leading losers 585 to 541. Valuations have become more attractive following the recent sell-off and could encourage gradual accumulation, but investors remain defensive as bond yields and crude oil prices stay elevated. Technology (+2.32%) and Telecommunications & Media (+1.53%) topped the gainers, while Energy (-0.24%) and Construction (-0.20%) led the laggards.

Global Markets. Stocks rose on Friday after a surprisingly weak September jobs report, with the Dow adding 250 points, or 0.49%, to 51,176.46, the S&P 500 gaining 0.73% to 7,722.72, and the Nasdaq climbing 1.19% to 27,190.86, after hitting an all-time high earlier in the session before pulling back as Treasury yields reversed course. Nonfarm payrolls showed the U.S. economy added just 29,000 jobs last month against expectations of 84,000, with unemployment rising to 4.2% from 4.1%. Fed funds futures now suggest a 77% likelihood the central bank will stand pat at this month's meeting. Meanwhile, Europe's STOXX 600 rose 0.75% to 631.35, supported by easing oil prices and selective buying in defensive counters. Asian markets traded mixed on Friday, with South Korea's KOSPI gaining 0.46% on continued strength in chipmakers, while Japan's Nikkei 225 fell 0.94% as investors booked profits following its recent strong rally. Hong Kong's Hang Seng dropped about 2.60% as markets reopened after the holiday. (CNBC) 

Market Outlook. The weak jobs data was seen as the kind of reading the market wanted, strengthening expectations for a Fed pause ahead of an earnings season expected to be strong, though Treasury yields rebounded after an initial drop and pared the day's gains, a reminder that the bond market remains a source of volatility following the recent global bond rout. We stay conservative on near-term risk appetite, as easing rate-hike concerns and resilient tech leadership offer support but elevated yields and oil price swings are likely to keep gains uneven. We remain cautious on the local bourse, as elevated bond yields and crude oil prices are likely to keep investors defensive. With key US labour market data pending, external headwinds should keep volatility elevated, and any recovery is likely to stay gradual until greater clarity emerges on the global rate and energy outlook.

Sector focus. Technology counters may extend their gains next week, supported by the tech-led rally on Wall Street. Telecommunications & Media could also see follow-through as investors stay selective and favour defensive earners amid elevated bond yields. Conversely, REIT and Property could remain under pressure if Treasury yields stay elevated.

Technical Commentary: The FBM KLCI edged up marginally to close at 1,630.87 (+0.03%), but the broader outlook remains weak. Thursday’s sharp sell-off confirmed a break below the Triple Top neckline near 1,650 and triggered a Death Cross. The index remains near the descending trendline that has capped rallies since the beginning of the year, while the lack of a meaningful rebound suggests continued selling pressure. Immediate support lies at 1,625, but a decisive break below this level could expose the index to a deeper decline toward 1,600. On the upside, resistance lies at 1,650–1,660. Until the index breaks above the descending trendline and reclaims the short-term moving averages, any rebound may be temporary rather than a genuine recovery.

Company News 

Gas Malaysia Bhd aims to make a final investment decision on plans for its first regasification terminal by the second half of next year. (The Edge)

PETRONAS Chemicals Group Bhd announced on Friday that its chief executive officer Mazuin Ismail will retire effective Jan 1, 2027. (The Edge)

A unit of troubled builder TXCD Bhd has secured a RM110 million subcontract from Vestland Resources Sdn Bhd to build a 62-storey Sovo commercial development in Section 44, Kuala Lumpur. (The Edge)

Berjaya Hills Resort Bhd, part of Berjaya Corp Bhd, said the enforcement on its properties by Pahang authorities was “unconscionable and totally unacceptable”. (The Edge)

The Road Transport Department (JPJ) will suspend MyEG Sdn Bhd and Zetrix AI Bhd,  both under MYEG Group, as its collection agents effective 12.01am next Monday. (The Edge)

Country Heights Holdings Bhd said its 80.90%-owned subsidiary Golden Horse Palace Bhd (GHPB) has been served with a winding-up petition over two outstanding Industrial Court awards involving RM312,653. (The Edge)

The Securities Commission Malaysia (SC) has approved construction firm Lim Seong Hai Capital Bhd’s transfer of its listing to the Main Market from the ACE Market. (The Edge)

Mah Sing Group Bhd has signed a collaboration term sheet with Kinergy Advancement Bhd to provide technical advisory and evaluate power infrastructure for its proposed data centre developments. (The Edge)

Malaysian Market Review. The FBM KLCI fell 1.26% to 1,630.36, erasing Wednesday's rebound, as rising US Treasury yields and lingering Middle East tensions weighed on sentiment, with selling concentrated in plantation heavyweights. Market breadth was decisively negative, with decliners outpacing advancers 750 to 342. Construction (-1.93%), Utilities (-1.87%) and Plantation (-1.85%) indices led the decline, while Technology (+0.54%) was the only sector index to close higher.

Global Markets. Wall Street ended marginally higher on Thursday, with the S&P 500 up 0.19% to 7,666.45, while the Dow and Nasdaq each edged up 0.04% to 50,926.56 and 26,871.60 respectively, as the 10-year Treasury yield retreated from an intraday high near 5.34%, its highest since 2002, and gains in chip stocks offset a more than 2% rise in oil after China suspended October fuel exports. European markets slumped, with the CAC 40 down 1.62%, the DAX falling 1.03% and the FTSE 100 down 1.68%, as a global bond selloff pushed UK 30-year gilt yields to 6% for the first time since 1998. Asian markets rallied, with the Nikkei 225 surging 3.30% to a six-week high on chip-led buying and the Kospi climbing 1.95% to 6,971.35, while Hong Kong and mainland China markets were closed for holidays. (CNBC)

Market Outlook. Global bond markets remain the key swing factor, with US 10-year yields briefly touching their highest since 2002 and UK 30-year gilt yields at a 28-year high, while firmer oil prices after China's fuel export suspension and stalled US-Iran talks keep inflation concerns alive. Tonight's US September non-farm payrolls will be pivotal for Fed rate expectations. With Thursday's selloff broad-based, we expect the FBM KLCI to remain under pressure into the weekend, although the chip-led rally in North Asia could lend selective support to technology names.

Sector focus. Technology should stay supported after upbeat guidance from a US memory-chip bellwether sparked chip-led rallies in Tokyo and Seoul. Energy may find support after oil climbed more than 2% overnight on China's fuel export suspension.

Technical Commentary: The FBM KLCI closed sharply lower at 1,630.36 (-1.26%), breaking below the neckline of the Triple Top pattern at around 1,650, which we have revised from our previously identified descending trend channel. The index has also triggered a Death Cross, with shorter-term EMAs crossing below longer-term EMAs, suggesting that the broader technical outlook remains sluggish. Nevertheless, with the KLCI now approaching the next support at 1,625, some bargain hunting could emerge following the recent sell-off. A decisive move back above 1,650 would provide the first indication of improving momentum, with the next resistance at 1,660. On the downside, a break below 1,625 could open the way towards the next support at 1,580.

Company News

The three co-founders and executive directors of MN Holdings Bhd made a combined net gain of nearly RM45 million after converting company warrants into shares at 20 sen apiece and offloading a chunk of those shares to institutional investors at RM3.91 per share. (The Edge)

IOI Properties Group Bhd said Bursa Malaysia Securities has approved the listing of its proposed RM7.58 billion IOIPG Malaysia Real Estate Investment Trust (IOIPG REIT) on the Main Market. (The Edge)

A Yinson Holdings Bhd unit and Langkawi Port Sdn Bhd (LPSB) signed a memorandum of understanding on Thursday to set up Malaysia’s first commercial fully electric passenger ferry service between Langkawi and Kuala Perlis (The Edge)

Tien Wah Press Holdings Bhd said its unit plans to buy a factory in Malang, Indonesia, which it currently leases, for 150 billion rupiah (RM34.07 million) from British American Tobacco (BAT) Group’s PT Bentoel Prima. (The Edge)

KKB Engineering Bhd has secured a government contract for water infrastructure upgrade in Sarawak worth RM517 million. (The Edge)

Hengyuan Refining Company Bhd has brought back former chief executive officer Erkki Tapio Ranta to lead the company, with immediate effect. (The Edge)

Hextar Capital Bhd subsidiary Legacy Core Sdn Bhd has secured a RM60 million subcontract from Doland (M) Sdn Bhd to upgrade a road in Sibu, Sarawak. (The Edge)

Globaltec Formation Bhd has announced the redesignation of executive director Chen Heng Mun, 56, as deputy group chief executive officer, with immediate effect (The Edge)

Malaysian Market Review. The FBM KLCI rebounded 0.44% to 1,651.17, snapping a five-session losing streak, as bargain hunting in utility heavyweights amid softer oil prices lifted the index. Market breadth remained negative, however, with decliners outpacing advancers 703 to 413. The Construction (+2.07%), Utilities (+0.62%) and Property (+0.38%) indices led gains, while the Energy (-2.65%), Telecommunications & Media (-0.72%) and Technology (-0.57%) indices were the top laggards.

Global Markets. Wall Street ended mostly lower on Wednesday, with the Dow down 0.86% to 50,906.05 and the S&P 500 easing 0.25% to 7,651.54, while the Nasdaq rose 0.24% to 26,861.06, as the 10-year Treasury yield climbed to around 5.30%, a fresh multi-decade high, overshadowing a softer-than-expected 0.2% rise in core PCE inflation. European markets fell, with the DAX down 0.79%, the CAC 40 sliding 0.89% and the FTSE 100 easing 0.29%, as higher eurozone inflation and rising bond yields weighed on sentiment. Asian markets were mostly higher, with the Nikkei 225 surging 1.94% to 66,753.72 on a tech-led rebound, the Hang Seng rising 0.37% to 24,613.27 and the Shanghai Composite gaining 0.31% to 3,842.19 ahead of the Golden Week break, while the Kospi slipped 0.48% to 6,838.04. (CNBC)

Market Outlook. Risk sentiment remains capped by the relentless climb in US yields, as stronger-than-expected US private hiring of 90,000 in September offset the relief from softer core PCE inflation. Investors now turn to Friday's September non-farm payrolls for direction on the Fed's next move, while stalled US-Iran negotiations keep oil prices volatile and mainland China markets stay shut for the Golden Week holiday. We expect the FBM KLCI to trade cautiously ahead of the US jobs data, with a more sustained recovery hinging on a pullback in US bond yields and tangible progress in US-Iran talks.

Sector focus. Technology bears watching with record quarterly results from a US memory-chip bellwether and the Nikkei's tech-led 1.94% rebound offering a supportive read-through, although the after-hours share reaction to the results was muted. Meanwhile, Utilities could remain in focus, supported by resilient electricity demand, ongoing grid investment and relatively defensive earnings visibility. Energy remains exposed to oil price swings as US-Iran negotiations stall.

Technical Commentary: The FBM KLCI closed higher at 1,651.17 (+0.44%) but remained below the 1,660 level. The index is also trading below its EMA9, EMA20, EMA120 and SMA200, indicating that the broader technical picture remains cautious. However, the index rebounded after holding above the lower boundary of its descending trend channel around 1,640, and we see early signs of stabilisation at current levels. A sustained move above 1,660 would provide the first indication of improving near-term momentum, with the next resistance at 1,680-1,685. On the downside, 1,640 remains the immediate support, while a break below this level could bring the next support at 1,625 into focus.

Company News

UWC Bhd achieved record performance for its financial year 2026, as its fourth quarter earnings more than doubled to RM37.6 million from RM16.37 million. (The Edge)

Fraser & Neave Holdings Bhd said its chief executive officer Lim Yew Hoe, 60, will retire effective Wednesday, after the Singaporean helmed the group for more than 11 years. (The Edge)

Astro Malaysia Holdings Bhd sank into the red in the May-July quarter — its first quarterly loss since late 2023 — dragged by unrealised foreign exchange losses and lower top line as subscription revenue dropped. (The Edge)

Divfex Bhd has secured two contracts worth RM120.12 million to supply equipment for a 15MW data centre fit-out in Penang. (The Edge)

Zetrix AI Bhd and IPVG Employees Inc have agreed to extend by three months the deadline to complete the Malaysian company's purchase of a 50% stake in Philippines-based MyEG Ventures Inc. (The Edge)

Batu Kawan Bhd’s unconditional mandatory takeover of MKH Bhd has crossed the 95% threshold, paving the way for the property developer’s delisting. (The Edge)

Chin Hin Group Property Bhd is selling its entire interest in four loss-making subsidiaries involved in the commercial vehicle and bodyworks business to HSG Sdn Bhd for a combined RM62 million in cash, to focus on its property development business. (The Edge)

ES Sunlogy Bhd slipped into the red in the last quarter of its financial year, citing one-off impairment losses on trade receivables, property, plant and equipment. (The Edge)

One of the brothers who co-founded Solid Automotive Bhd, Ker Boon Kee, has transferred his shares in the company to his children, making his son and executive director Ker Keddy the company’s second-largest shareholder. (The Edge)

Malaysian Market Review. The FBM KLCI fell 1.56% to 1,643.96, its fifth consecutive decline, as selling in banking heavyweights tracked Wall Street's overnight weakness, with higher oil prices and elevated US bond yields weighing on sentiment. Market breadth was negative, with decliners outpacing advancers 688 to 412. The Financial Services (-1.72%), Transportation (-1.47%) and Property (-1.44%) indices were the top laggards, while only the Energy (+0.80%) and REIT (+0.51%) indices closed higher.

Global Markets. Wall Street ended slightly lower on Tuesday, with the Dow down 0.26% to 51,349.92, the S&P 500 easing 0.17% to 7,670.84 and the Nasdaq slipping 0.09% to 26,797.54, as long-term Treasury yields held near their highest since 2007 and US consumer confidence fell to a 12-year low of 81.9. European markets were mostly lower, with the STOXX 600 down 0.09%, the FTSE 100 falling 0.45% and the CAC 40 declining 0.53% as elevated bond yields offset a rally in chip stocks, while the DAX edged up 0.10% on a rally in chip stocks. Asian markets were mostly lower, with the Nikkei 225 down 0.60% to 65,481.27 on ex-dividend adjustments concerns over rising bond yields, the Hang Seng slipping 0.48% to 24,523.57 and the Kospi easing 0.27% to 6,870.81, while the Shanghai Composite edged up 0.18% to 3,830.45 ahead of the National Day holiday. (CNBC)

Market Outlook. Sentiment remains fragile, with the US 10-year Treasury yield at its highest since 2007 and consumer confidence at a 12-year low, although Brent's slip below US$105 a barrel as US-Iran talks continued through mediators offered some relief. Investors now turn to tonight's US PCE inflation data and Friday's September non-farm payrolls for direction on the Fed's next move. After Tuesday's 1.56% slide to the lower boundary of its descending trend channel, we expect the FBM KLCI to trade cautiously with 1,640 as key support, while any easing in US yields could spark bargain hunting in beaten-down heavyweights.

Sector focus. Financial Services in focus as banking heavyweights continue to track Wall Street and rising US yields. Energy, one of only two gaining sectors may give back some gains after Brent eased overnight on continued US-Iran talks. Technology faces a key test from US memory-chip earnings this week for a read on AI-driven demand.

Technical Commentary: The FBM KLCI closed sharply lower at 1,643.96 (-1.56%) and broke below the 1,660 support level. The index is also trading below its EMA9, EMA20, EMA120 and SMA200, indicating that the broader technical picture remains cautious. However, at current levels, the KLCI is now testing the lower boundary of its descending trend channel around 1,640, where we could see early signs of stabilisation emerge. A sustained move back above 1,660 would provide the first indication of improving near-term momentum, with the next resistance at 1,680-1,685. On the downside, 1,640 remains the immediate support, while a break below this level could bring the next support at 1,625 into focus.

Company News

Yinson Holdings Bhd’s net profit for the three months ended July 31, 2026 (2QFY2027) grew 26.7% to RM128 million from RM101 million in the previous year. (The Edge)

Gamuda Bhd closed its financial year ended July 31, 2026 (FY2026) with a net profit of RM1.05 billion, up 5% from RM1 billion a year earlier. (The Edge)

In a separate filing, a consortium between Gamuda Bhd, SD Guthrie Bhd and Gentari Sdn Bhd have inked an agreement with an unnamed US-based technology company for a 680-megawatt renewable energy project in Perak, which includes a four-hour battery storage system. (The Edge)

AEON Credit Service (M) Bhd reported a 18% drop in its net profit for the three months ended Aug 31, 2026 (2QFY2027) to RM59.30 million from RM72.23 million a year earlier, amid higher impairment losses on financing receivables. (The Edge)

UMS Integration Ltd is seeking to raise up to RM450 million through a placement to fund projects in Penang, Malaysia, as well as expansion in Vietnam and Singapore. (The Edge)

Kelington Group Bhd has secured a RM172 million contract for engineering and early-stage infrastructure development works for an advanced data storage manufacturing facility in Kuching, Sarawak (RM447 million) following a takeover offer. (The Edge)

Vantris Energy Bhd’s net profit for the second quarter ended July 31, 2026 (2QFY2027) stood at RM75.3 million, compared with a net loss of RM230.8 million a year earlier. (The Edge)

Supermax Corp Bhd co-founders Datuk Seri Stanley Thai and wife Datuk Wira Cheryl Tan Bee Geok have agreed to wind down their company that holds their interests in the glove manufacturer. (The Edge)

Confectioner Apollo Food Holdings Bhd’s 1QFY2026 net profit rose 9.5% to RM6.96 million from RM6.36 million the previous year, while revenue grew 13.36% to RM73.76 million from RM65.07 million, driven by higher export sales, particularly in its core Indonesian market. (The Edge)

VS Industry Bhd posted a net loss of RM53.8 million for its financial year ended July 31, 2026, its first full-year loss since it was listed in 1998. (The Edge)

Sern Kou Resources Bhd said on Tuesday that its will wind down its plywood manufacturing unit due to continuous quarterly losses since the financial year ended June 30, 2024 (FY2024). (The Edge)

Malaysian Market Review. The FBM KLCI slipped 0.10% to 1,670.02, its fourth consecutive decline, as early support from the US-China tariff reduction agreement faded amid President Trump's rejection of Iran's Strait of Hormuz proposal and persistently elevated US bond yields. Market breadth was decisively negative, with decliners outpacing advancers 748 to 388. The Health Care (-2.20%), Technology (-1.86%) and Utilities (-1.58%) indices were the top laggards, while the Transportation (+0.51%), Financial Services (+0.24%) and Construction (+0.21%) indices led gains.

Global Markets. Wall Street retreated on Monday, with the Dow down 0.67% to 51,481.51, the S&P 500 falling 0.77% to 7,683.69 and the Nasdaq sliding 0.92% to 26,820.38. The 10-year Treasury yield climbed to around 5.20%, a 19-year high, as President Trump's rejection of Iran's Strait of Hormuz proposal revived inflation and Fed tightening concerns. European markets closed broadly mixed, with the DAX declining 0.13% and the FTSE 100 easing 0.10%, as a surge in UK homebuilders was offset by weakness in miners, while higher oil prices capped broader gains. The CAC 40 edged up 0.01% to close broadly flat. Asian markets were mostly lower, with the Nikkei 225 down 0.73% to 65,877.62, ending a five-session winning streak, the Shanghai Composite falling 1.67% to 3,823.62 and the Kospi sliding 2.70% to 6,889.74, while the Hang Seng edged up 0.54% to 24,642.51. (CNBC)

Market Outlook. Risk appetite has weakened, with the US 10-year Treasury yield at a 19-year high reviving Fed tightening concerns, although crude pared an early spike of more than 4% to settle only modestly higher on expectations of mediated US-Iran talks. Investors will focus on Wednesday's US PCE inflation data, Friday's September non-farm payrolls and Micron's results this week for a read on AI-driven chip demand. Following Wall Street's decline, we expect the FBM KLCI to stay under pressure within the 1,660-1,680 range until external yield and oil pressures ease.

Sector focus. Technology remains in focus after the Bursa Technology Index fell 1.86% on Monday, while the Nasdaq Composite declined 0.92% overnight, adding to near-term pressure ahead of Micron's earnings on Wednesday. The results will offer a key read-through on memory pricing, HBM demand and AI-related semiconductor spending. Energy stocks, meanwhile, are likely to track crude prices, which pared an intraday gain of more than US$4/bbl to close modestly higher as expectations of mediated US-Iran talks capped the rally.

Technical Commentary: The FBM KLCI closed marginally lower at 1,670.02 (-0.10%) and remained below the 1,680 level. The index is also trading below its EMA9, EMA20, EMA120 and SMA200, indicating that the broader technical picture remains cautious. However, the index held within a narrow range above the 1,660 support, and we continue to see early signs of stabilisation as the KLCI approaches the lower boundary of its descending trend channel around 1,640. A sustained move above 1,680-1,685 would provide the first indication of improving near-term momentum, with the next resistance at 1,700-1,705. On the downside, 1,660 remains the immediate support, while a break below this level could bring the lower boundary of the descending trend channel into focus.

Company News

Gamuda Bhd has secured a A$790 million (RM2.28 billion) engineering, procurement and construction (EPC) contract in Australia to develop the first stage of the Mortlake Energy Hub. (The Edge)

Zetrix AI Bhd, whose external auditors TGS TW PLT resigned on Monday, announced that it has completed the payout of its delayed cash dividend to all eligible shareholders. (The Edge)

Property developer Sunsuria Bhd is selling a piece of freehold commercial land in Sepang, Selangor, for RM316.84 million cash to Amazon Data Services Malaysia Sdn Bhd. (The Edge)

Shareholders of Willowglen MSC Bhd have been advised to approve the planned disposal of its core businesses. (The Edge)

TSH Resources Bhd clarified that its RM42 million fine in Indonesia involves 1,228.89 hectares of plantations outside the licensed area of its Indonesian subsidiary PT Sarana Prima Multi Niaga (PT SPMN). (The Edge)

Hap Seng Consolidated Bhd said it plans to sell its Singapore-listed building materials unit for about S$140 million (RM447 million) following a takeover offer. (The Edge)

GUH Holdings Bhd has received the fourth and final compensation payment for the transfer of its industrial land in Suzhou, China, to the Chinese government for 195 million yuan (RM114.9 million). (The Edge)

Willowglen MSC Bhd has secured a RM108 million contract through its Singapore subsidiary Willowglen Services Pte Ltd — an operating unit it is currently in the process of divesting. (The Edge)

KKB Engineering Bhd has secured RM462 million worth of contracts from Sarawak Shell Bhd and two other companies. (The Edge)

Kinergy Advancement Bhd founder Datuk Dr Lai Keng Onn has become the single largest shareholder of marine vessels operator Avangaad Bhd, after acquiring a 278.38 million-share block from Sindora Bhd and Kulim (M) Bhd. (The Edge)

Poh Kong Holdings Bhd’s net profit for the quarter ended July 31, 2026 (4QFY2026) jumped to RM36.20 million from RM22.68 million, as revenue grew 3.5% to RM378.36 million from RM365.5 million. (The Edge)

Property developer AYER Holdings Bhd has proposed to acquire for RM138 million cash two parcels of contiguous freehold land along Jalan Kuchai Lama, with a combined area of 9.11 acres, for future development projects. (The Edge)

Malaysian Market Review. The FBM KLCI eased 0.04% to 1,671.62, its third straight session of losses, as rising US Treasury yields and escalating West Asia tensions kept investors cautious. Market breadth was negative, with decliners edging out advancers 590 to 575. On the sectoral front, the Construction (+1.68%), Utilities (+1.65%) and Technology (+1.55%) indices led gains, while the Health Care (-0.74%), Plantation (-0.60%) and REIT (-0.45%) indices were the top laggards.

Global Markets. Wall Street closed higher on Friday, with the Dow up 0.93% to 51,828.62, the S&P 500 gaining 0.51% to 7,743.41 and the Nasdaq rising 0.48% to 27,068.72. A more than 2% drop in WTI crude on Friday, driven by renewed hopes for US-Iran negotiations, eased inflationary concerns, while Microsoft’s 3.70% gain on new AI features provided a boost to technology stocks. European markets edged higher, with the STOXX Europe 600 up 0.35% to 638.65 and the DAX gaining 0.56% as moderating energy prices and a rebound in banks supported sentiment. Asian markets were mixed in holiday-thinned trade, with the Nikkei 225 up 1.30% to 66,364.20 for a fifth straight gain on lower oil and firmer tech. The Hang Seng fell 1.01% to 24,510.09 as a tech selloff deepened, with mainland China closed for the Mid-Autumn Festival. (CNBC)

Market Outlook. Sentiment faces a fresh test this week after President Trump on Saturday rejected Iran's seven-day proposal to reopen the Strait of Hormuz, threatening to unwind Friday's oil relief, though he expects talks to resume in the coming days. With the US 10-year Treasury yield hovering around 5.20%, its highest since 2007, investors will look to Wednesday's US PCE inflation data and Friday's September non-farm payrolls for direction on rates. Concrete progress on US-Iran talks would be the main catalyst for a relief rebound. Meanwhile, the Trump-Xi summit has eased near-term US-China trade tensions, while expectations of a Pre-Budget Rally could provide further support to market sentiment.  

Sector focus. Technology remains in focus after the Bursa Technology index rose 1.55% on Friday, with AI-led gains in US and Japanese tech names keeping global chip sentiment supportive. Oil & Gas bears watching as the weekend rejection of Iran's Hormuz proposal could reverse Friday's slide in WTI crude. REITs are likely to stay under pressure while the US 10-year yield holds near its highest since 2007.

Technical Commentary: The FBM KLCI closed marginally lower at 1,671.62 (-0.04%) and remained below the 1,680 level. The index is also trading below its EMA9, EMA20, EMA120 and SMA200, indicating that the broader technical picture remains cautious. However, at current levels, we see early signs of stabilisation as the KLCI approaches the lower boundary of its descending trend channel around 1,640. A sustained move above 1,680-1,685 would provide the first indication of improving near-term momentum, with the next resistance at 1,700-1,705. On the downside, 1,660 remains the immediate support, while a break below this level could bring the lower boundary of the descending trend channel into focus.

Company News

Vantris Energy Bhd said its unit has secured two offshore transportation and installation work orders with a combined value of about RM1.8 billion. (The Edge)

Cash-rich Insas Bhd is planning to dispose of its entire remaining 5.65% stake in Inari Amertron Bhd, valued at roughly RM580 million, with the proceeds raised to be used for working capital and repay credit facilities. (The Edge)

Teck Guan Perdana Bhd saw its net profit for the second-quarter ended July 31, 2026 (2QFY2027) more than triple to RM16 million from RM5.26 million a year earlier. (The Edge)

Shareholders of Willowglen MSC Bhd have been advised to approve the planned disposal of its core businesses. (The Edge)

Plantation company TSH Resources Bhd said its 90%-owned indirect Indonesian subsidiary, PT Sarana Prima Multi Niaga, has been fined 184.35 billion rupiah (about RM42 million) by Indonesia’s Forest Area Enforcement Task Force (FAC). (The Edge)

Yinson Holdings Bhd and MISC Bhd said discussions on Yinson's potential privatisation are ongoing, with the indicative offer price maintained at RM2.35 per share. (The Edge)

Heavy machinery specialist Favelle Favco Bhd has secured three contracts worth RM88.8 million to supply cranes. (The Edge)

Energy and engineering solutions provider Kinergy Advancement Bhd, formerly known as Kejuruteraan Asastera Bhd, plans to place out up to 10% of its issued shares to third-party investors to raise up to RM79.75 million to finance its Perlis power plant and repay debts. (The Edge)

Engineering services and renewable energy provider Kawan Renergy Bhd posted a 72.8% drop in its third-quarter net profit, due partly to cost overruns at its power plant project in Sabah. (The Edge)

EWI Capital Bhd, formerly known as Eco-World International Bhd, reported a wider net loss of RM13.23 million in the third quarter, up from RM8.18 million a year ago, weighed down by higher impairment and finance costs. (The Edge)

Construction firm Taghill Holdings Bhd has signed a joint venture agreement to develop a residential project on a Malay reservation land in Kelantan (The Edge)

·   Trump-Xi summit eases near-term trade tensions, with the US-China trade truce extended to 10 January 2027, but major structural disputes remain unresolved.

·   Malaysia stands to benefit from greater trade visibility, given strong exposure to both China and the US, with E&E exports remaining a key growth driver.

·   Budget 2027 on 9 October could trigger a Pre-Budget Rally.

·   Maintain our Barbell Strategy, favouring AI and semiconductors, data centre infrastructure, energy transition, critical minerals and consumer digitalisation, alongside defensive exposure to Utilities and Plantation.

·   Maintain our year-end KLCI target of 1,770.

Quick Take

The Trump-Xi summit in Washington on 24 September produced a series of measures to stabilise bilateral ties, but fell short of a comprehensive trade agreement. Most importantly, ahead of the leaders' meeting, US Treasury Secretary Scott Bessent announced that the existing US-China trade truce would be extended by two months from its scheduled 10 November 2026 expiry to 10 January 2027, buying both sides additional time to negotiate a broader economic arrangement.

The two countries agreed on a framework covering US$30bn of reciprocal tariff reductions, the operationalisation of their Boards of Trade and Investment, and the establishment of a bilateral dialogue on “super intelligence” and AI-related incidents. China also committed to importing at least 10m tonnes of US coal annually in 2027 and 2028.

However, the summit did not resolve several structural areas of contention, particularly rare earth supplies, advanced technology restrictions, Taiwan and the US-China positions on Iran. The extension therefore represents a pause in escalation rather than a fundamental reset in bilateral relations.

Our View

We see the Trump-Xi summit as particularly important to the Trump administration, underscored by Trump’s rare decision to personally welcome Xi at Joint Base Andrews on 23 September. The gesture was unusually rare, with the last comparable presidential airport welcome at Andrews dating back to 1962, when President John F. Kennedy greeted UK Prime Minister Harold Macmillan.

The symbolism is notable given that Trump is approaching the November 2026 US midterm elections. While there is no official evidence that the airport welcome was specifically motivated by electoral considerations, maintaining a more stable relationship with China could help reduce another source of economic and trade uncertainty at a politically sensitive time.

Against this backdrop, we see the summit as a reduction in near-term US-China trade uncertainty rather than a fundamental reset in bilateral relations. The extension of the trade truce to 10 January 2027 gives companies additional time to plan around tariffs and supply-chain arrangements, while the new bilateral mechanisms provide channels for continued negotiations.

However, the official outcomes do not indicate that the major structural disputes have been resolved. Rare earths and critical-mineral supply remain under discussion, while the newly established AI dialogue addresses communication and risk management rather than the broader US-China technology rivalry.

The next important checkpoints are the APEC Economic Leaders' Meeting in Shenzhen on 18-19 November 2026 and the G20 Leaders' Summit in Miami on 14-15 December 2026. Both governments said Trump and Xi intend to attend each other's meetings, providing further opportunities to assess whether the current trade détente can be sustained.

For Malaysia, the continued stability in US-China relations is relevant given the country's substantial trade links with both economies. During January-August 2026, Malaysia's trade with China increased 35.0% y-o-y to RM456.68bn, while trade with the US rose 35.7% to RM328.84bn. E&E products were an important driver of exports to both markets.

Market Implications

The latest US-China developments should reduce near-term trade uncertainty and support regional risk sentiment, with both sides pursuing more favourable tariff treatment for US$30bn of non-sensitive goods and strengthening bilateral trade, investment and AI dialogue. However, ongoing negotiations over rare earths and other critical minerals indicate that structural supply-chain risks remain.

For Malaysia, the stabilisation in US-China trade relations is broadly constructive given its strong exposure to both markets, while sustained E&E demand continues to underpin export growth and the regional semiconductor supply chain.

Technical Analysis - Potential Bottoming Ahead of Budget 2027

For the FBM KLCI, as highlighted in our previous Market Outlook report on 3 September 2026, a sustained break below the 1,700 level could pave the way towards the next support zone at 1,685. This subsequently materialised, with the index falling to as low as 1,661. We had also advised investors to monitor price action for signs of stabilisation before increasing exposure.

At current levels, we see early signs of stabilisation as the KLCI approaches the lower boundary of its descending trend channel. With 2027 Malaysia Budget scheduled to be tabled on 9 October 2026, we expect expectations of a Pre-Budget Rally to provide near-term support to the market.

Strategy

We believe the summit is market-positive from a risk-premium perspective, but unlikely to trigger a major re-rating on its own. The key takeaway is that the US-China relationship has shifted towards managing competition rather than resolving it. As the trade truce now runs until January 2027, markets are likely to focus increasingly on implementation, particularly tariff arrangements, rare earth shipments and technology restrictions, rather than diplomatic optics.

We therefore retain our barbell strategy, balancing defensive, earnings-resilient companies with high-quality structural growth stocks. Our preferred growth themes include AI and semiconductors, data centre infrastructure, energy transition, critical minerals and Consumer digitalisation, while Utilities and Plantation provide defensive earnings support.

Domestically, attention will now turn to the Melaka state election following the dissolution of the state assembly on 23 September 2026. Political uncertainty could rise in the near term as parties negotiate seat allocations and electoral cooperation. However, the state government has indicated that administration and public services will continue as usual during the caretaker period, suggesting limited disruption to economic activity.

We maintain our FBM KLCI year-end target at 1,770, as the easing in US-China tensions could help reduce near-term geopolitical risk, although domestic political developments and broader policy and trade uncertainties remain key factors for market sentiment.

Malaysian Market Review. The FBM KLCI fell 0.25% to 1,672.31 on Thursday, weighed down by last-minute selling after a choppy session, with weakness in technology and semiconductor stocks weighing on market sentiment. Market breadth remained negative, with 677 decliners outnumbering 436 gainers, while 542 counters were unchanged. Sector-wise, Energy (+1.17%), Construction (+0.65%) and Healthcare (+0.60%) led the gains, while Telecommunications & Media (-1.97%), Technology (-1.78%) and Consumer Products & Services (-0.35%) were the top laggards.

Global Markets: U.S. equities were broadly flat overnight, with the S&P 500, Nasdaq and Dow Jones ending (-0.02%), (+0.01%) and (-0.31%), respectively, as elevated Treasury yields and oil prices continued to weigh on sentiment. The 10-year Treasury yield climbed to 5.22%, its highest level since June 2007, while the 30-year yield hit 5.50%, a level last seen in 2004. Meanwhile, Brent crude rose more than 3% to above US$106.77/bbl, as investors monitored developments in the US-Iran conflict. In Europe, the STOXX Europe 600 fell (-0.55%), while Asian markets were mixed, with the Nikkei gaining (+0.76%), but the Hang Seng and Shanghai Composite declining (-0.29%) and (- 1.22%), respectively. South Korea was closed for the Chuseok holiday (CNBC).

Market Outlook. We expect the FBM KLCI to remain cautious and range-bound in the near term, as elevated US Treasury yields, higher oil prices, persistent foreign selling and geopolitical uncertainties continue to weigh on investor sentiment. The rise in bond yields, alongside expectations of further Fed rate hikes, could continue to pressure equity valuations, while developments in the US-Iran conflict remain a key source of geopolitical and inflationary risks. Investors will also monitor the follow-through from the Trump-Xi meeting, particularly on trade, AI and critical minerals, following the extension of the US-China trade truce. Domestically, attention will turn to the upcoming Melaka state election following the dissolution of the state assembly on 23 September, while Budget 2027 on 9 October will also remain in focus. Against this backdrop, market volatility could remain elevated, with a sustained recovery likely requiring clearer external catalysts and improved global risk sentiment.

Sector focus. Energy could remain in focus as Brent crude stays above US$100/bbl amid ongoing Middle East tensions, supporting sentiment towards oil and gas-related counters. Utilities could also remain in focus, backed by resilient electricity demand and accelerating grid investment, particularly as data centre demand continues to drive power consumption. Meanwhile, the Construction sector remains supported by an active data centre pipeline and the expected rollout of public infrastructure projects, providing visibility for order-book replenishment into 2H26.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI extended its decline and remained below the 1,680 level. The index also remains below its EMA9, EMA20, EMA120 and SMA200, suggesting that near-term momentum remains weak. We expect the index to remain under pressure, with 1,680-1,685 acting as the immediate resistance zone, followed by 1,700-1,705. On the downside, 1,660 remains the key support, while a sustained break below this level could expose the index to the lower boundary of the descending trend channel around 1,640.

Company News

HE Group Bhd secured a RM124m subcontract to supply main electrical works for a data centre in Johor. (The Edge)

Eco World Development Group Bhd reported 3QFY26 net profit up 10.9% YoY to RM112.2m and revenue up 27.5% to RM971.5m, driven by higher locked-in sales, putting the group on track for record FY2026 sales and earnings. (The Edge)

MNRB Holdings Bhd declared a final dividend of 15 sen per share for FY2026, with 5 sen subject to its dividend reinvestment plan. (The Edge)

Zetrix AI Bhd delayed its cash dividend payout again to Sept 28 due to an earlier calculation error, while dividends linked to disputed nominee accounts remain on hold pending the legal case. (The Edge)

UUE Holdings Bhd secured four Singapore contracts worth S$9.3m (RM29.7m) for 400kV power cables and related equipment, bringing FYTD contract wins to RM127.9m and strengthening earnings visibility for the next two to three years. (The Edge)

IOIPG Malaysia REIT plans to distribute at least 90% of distributable income quarterly and is seeking a Main Market listing with RM7.66bn of properties across the Klang Valley and Penang. (The Edge)

IHH Healthcare Bhd’s subsidiary appealed a Tokyo court ruling that dismissed its ¥200bn (RM5.3bn) damages claim against Daiichi Sankyo over the Fortis-related case. (The Edge)

MyNews Holdings Bhd reported 3QFY26 net profit down 40.5% YoY to RM3.83m despite revenue rising 9% to RM251.8m, as higher administrative, selling and distribution expenses offset growth from its expanded store network. (The Edge)

Superlon Holdings Bhd posted a 77.6% YoY surge in 1QFY27 net profit to RM5.48m, its highest quarterly profit in a decade, supported by record revenue, stronger manufacturing contribution and improved margins. (The Edge)

Infomina Bhd secured a RM63m contract to provide technology refresh, installation, integration and maintenance services to a financial institution. (The Edge)

Ajinomoto (Malaysia) Bhd shareholders approved the RM20 per share offer from parent Ajinomoto Co Inc to privatise the company through a selective capital reduction. (The Edge)

Inta Bina Group Bhd secured a RM221.08m contract for main building works for an apartment and office development in Klang from Mitraland Group. (The Edge)

Malaysian Market Review. The FBM KLCI declined 0.42% to 1,676.43 on Wednesday, turning negative after two consecutive sessions of gains, as profit-taking in selected heavyweights and weaker sentiment towards petrochemical counters weighed on the market amid continued weakness in oil prices. Market breadth turned negative, with 549 decliners outnumbering 519 gainers, while 577 counters were unchanged. Sector-wise, Energy (+0.69%), Telecommunications & Media (+0.63%) and REIT (+0.13%) led the gains, while Transportation & Logistics (-0.83%), Financial Services (-0.80%) and Plantation (-0.49%) were the top laggards.

Global Markets: U.S. equities fell overnight, with the S&P 500, Nasdaq and Dow Jones declining (- 0.75%), (-1.13%) and (-0.68%), respectively, as a sharp rise in Treasury yields renewed concerns over further Fed rate hikes. The 10-year Treasury yield climbed to 5.14%, its highest level since July 2007. Meanwhile, Brent crude rebounded 4.83% to US$103.31/bbl after five consecutive sessions of losses, as investors assessed developments in the US-Iran conflict. In Europe, the STOXX Europe 600 fell (-0.44%), while Asian markets were mixed, with the Kospi gaining (+0.90%) but the Hang Seng and Shanghai Composite declining (-1.01%) and (-0.39%), respectively. Japan remained closed for a holiday (CNBC).

Market Outlook. We expect the FBM KLCI to remain cautious and range-bound in the near term following Wednesday’s pullback, as weaker Wall Street performance and elevated US Treasury yields could weigh on regional risk sentiment. The rise in Treasury yields, together with growing expectations of further Fed rate hikes, may continue to pressure equity valuations and limit nearterm upside. Meanwhile, the rebound in oil prices could keep inflation and interest-rate concerns in focus, although any further progress in US-Iran talks could help ease geopolitical risks. Investors will also closely monitor the upcoming Trump-Xi meeting for developments on trade, AI and critical minerals. Domestically, Budget 2027 will remain in focus, particularly on cost-of-living measures and targeted subsidies. Against this backdrop, selective bargain hunting may continue, although a sustained market recovery will likely require clearer external catalysts and improved global risk sentiment.

Sector focus. Utilities could remain in focus amid the more cautious market environment, supported by resilient electricity demand, ongoing grid investment and relatively defensive earnings visibility. Banking stocks may also attract interest, underpinned by healthy loan growth and resilient asset quality, although margin pressure could persist amid the evolving interest-rate outlook.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI fell back below the 1,680 level after briefly reclaiming it in the previous session. The index also remains below its EMA9, EMA20, EMA120 and SMA200, suggesting that near-term momentum remains weak. We expect the index to remain under pressure, with 1,680-1,685 acting as the immediate resistance zone, followed by 1,700-1,705. On the downside, a sustained break below 1,660 could expose the index to the lower boundary of the descending trend channel around 1,640.

Company News

Tenaga Nasional Bhd said the additional household electricity subsidy is a one-off measure and is considering adjustments to its charges to better protect consumers, while the estimated RM150m subsidy cost could be lower than initially expected. (The Edge)

CTOS Digital Bhd detected unauthorised access to an environment supporting its consumer business, with certain files containing a limited subset of processed consumer data accessed, although the specific information affected was not disclosed. (The Edge)

Carimin Petroleum Bhd’s 90%-owned subsidiary proposed to acquire leasehold land and buildings in Sarawak for RM21.12m, with plans to reactivate the site’s galvanising and metal fabrication business. (The Edge)

YTL Power International Bhd’s YTL AI Labs, in collaboration with Nvidia, developed a dataset of 1.35 million synthetic Malaysian personas to support the development of Malaysia-context AI models. (The Edge)

Aneka Jaringan Holdings Bhd secured a RM26.2m contract for foundation works for a 53-storey serviced apartment project at Jalan Yap Kwan Seng, Kuala Lumpur. (The Edge)

Destini Bhd signed a two-year agreement with Siemens Mobility to establish a reliability control centre aimed at developing data-driven railway maintenance, repair and overhaul services. (The Edge)

Rimbunan Sawit Bhd estimated a RM10m revenue shortfall following a three-month blockade at its Ulu Teru Estate in Miri, with operations fully resuming on Sept 21. (The Edge)

PRG Holdings Bhd’s construction arm is seeking more than RM64m in outstanding payments from Premier De Muara, which the High Court has now ordered to be wound up. (The Edge)

LB Aluminium Bhd reported a 60% YoY increase in 1QFY27 net profit to RM18.6m, while revenue grew 17.9% to RM318.8m, supported by stronger aluminium and property contributions. (The Edge)

Gold Li Holdings Bhd reported a net loss of RM3.89m on revenue of RM7m for 2QFY27, marking its second interim financial report since its ACE Market debut in May. (The Edge)

Malaysian Market Review. The FBM KLCI surged (+0.99%) to 1,683.50 on Tuesday, extending its rebound as bargain hunting and buying interest in selected banking and technology counters lifted market sentiment, in line with stronger regional markets and easing concerns over oil prices. Market breadth was positive, with 678 gainers outnumbering 458 losers, while 572 counters were unchanged. Sector-wise, Technology (+2.29%), Utilities (+1.70%) and Financial Services (+1.25%) led the gains, while Healthcare (-0.69%) and Energy (-0.09%) were the only sectors in negative territory.

Global Markets: U.S. equities were mixed overnight, with the Nasdaq Composite gaining (+0.45%) to close at a fresh record of 27,244.28, while the S&P 500 was largely unchanged (0.00%) and the Dow Jones Industrial Average declined (-0.36%). The Nasdaq was supported by gains in technology stocks, including SanDisk, which rose nearly 7% following a bullish analyst call. Meanwhile, Brent crude fell 1.47% to US$98.55/bbl, marking its fifth consecutive session of losses, following reports of potential de-escalation between the US and Iran. In Europe, the STOXX Europe 600 edged higher (+0.13%) after initially trading lower, as investors monitored developments surrounding the US-Iran situation and oil prices. Across Asia, markets were mixed, with the Hang Seng Index rising (+0.18%) and the Shanghai Composite gaining (+0.06%) and South Korea’s Kospi advancing (+0.15%), while Japan's markets were closed for a holiday (CNBC).

Market Outlook. We expect the FBM KLCI to maintain its recovery momentum in the near term, supported by improving global risk sentiment, particularly following the renewed strength in technology and semiconductor stocks. The retreat in oil prices could also provide some relief to inflationary concerns and overall market sentiment, while expectations of further progress in the upcoming Trump-Xi meeting may support regional equities. Nevertheless, market conditions are likely to remain volatile as investors continue to assess developments surrounding the US-Iran conflict, the outlook for global interest rates and elevated US Treasury yields. Domestically, recent weakness could continue to encourage bargain hunting, although the sustainability of the rebound will likely depend on improvements in external sentiment and follow-through buying.

Sector focus. Technology stocks could stay on investors’ radar amid the renewed strength in global AI and semiconductor counters, although the sector remains sensitive to movements in US Treasury yields. Utilities may also continue to attract defensive interest, supported by resilient electricity demand and ongoing grid and energy-transition investments.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI extended its rebound for a second consecutive session, rising 0.99% to close at 1,683.53, reclaiming the 1,680 level. We expect the index to extend its rebound today, with the 1,700-1,705-region likely to cap further upside. A sustained break above this zone would signal improving near-term momentum.

However, the index remains within a descending trend channel and below its EMA9, EMA20, EMA120 and SMA200, suggesting that momentum remains weak. Failure to sustain above 1,680 could trigger a pullback towards the lower channel support at around 1,660.

Company News

Cuscapi Bhd proposed a private placement of up to 94.49m new shares to raise RM4.55m, mainly for working capital, including operating expenses and payments to trade creditors. (The Edge)

Zetrix AI Bhd managing director Wong Thean Soon further trimmed his stake to 11.06% from 11.97%, while his investment vehicle Asia Internet Holdings ceased to be a substantial shareholder after disposing of 57m shares. (The Edge)

Sunway Healthcare Holdings Bhd saw Singapore sovereign wealth fund GIC sell 575m shares worth RM1.2bn at RM2.08 per share, representing a 9% discount to Monday’s closing price. (The Edge)

Eco World Development Group Bhd and its JV partners agreed to sell 222 acres of industrial land in Negeri Sembilan to Tera Data Centers for RM1bn. (The Edge)

MMAG Holdings Bhd proposed a RM130m share capital reduction to eliminate part of its accumulated losses and strengthen its financial position. (The Edge)

Country Heights Holdings Bhd saw the forced auction of its six-acre commercial land in Kajang cancelled after no bidders came forward, with the property previously carrying a RM55m reserve price. (The Edge)

OGX Group Bhd ventured into renewable energy through battery energy storage systems, targeting Malaysia’s growing data centre market after being appointed an authorised distributor of Chinabased HYXI’s products. (The Edge)

Maybulk Bhd proposed to acquire a freehold industrial property in Bandar Bukit Raja, Klang for RM35.5m as part of its diversification into industrial property. (The Edge)

Oriental Interest Bhd applied to withdraw its draft circular and listing application for its proposed RM280m related-party acquisition in the motorcycle financing and retail business to facilitate updates to the documents. (The Edge)

Malaysian Market Review. The FBM KLCI edged up (+0.08%) to 1,666.94 on Monday, as bargain hunting in selected blue-chip stocks helped the benchmark end slightly higher after a weak start, while easing concerns over the Middle East conflict and retreating oil prices provided some support to sentiment. Market breadth remained positive, with 654 advancers against 552 decliners, while 517 counters were unchanged. Sector-wise, Energy (+3.02%), Utilities (+1.94%) and Transportation & Logistics (+0.46%) led the gains, while Industrial Products & Services (-0.94%), Plantation (-0.91%) and Property (-0.72%) were the top laggards.

Global Markets: U.S. equities rallied overnight, with the Dow Jones Industrial Average gaining (+0.71%), while the S&P 500 and Nasdaq Composite advanced (+1.49%) and (+2.26%), respectively, as gains in artificial intelligence-related stocks lifted the broader market. Intel surged 12%, while Advanced Micro Devices (AMD) and Qualcomm gained about 10% and more than 9%, respectively, with AMD's market capitalisation surpassing US$1tn. The Nasdaq also closed at a fresh record, while Brent crude fell 3.24% to US$100.02/bbl. In Europe, the STOXX Europe 600 opened (+1.02%), supported by gains in technology and financial stocks alongside easing oil prices. Across Asia, markets ended mostly higher, with South Korea's Kospi gaining (+1.65%), Hong Kong's Hang Seng Index rising (+1.18%) and China's Shanghai Composite advancing (+0.97%), while Japan was closed for a holiday (CNBC).

Market Outlook. We expect the FBM KLCI to remain in consolidation mode in the near-term following Monday's mild rebound, with bargain hunting providing some support after the recent correction. However, upside could remain capped by elevated US Treasury yields, expectations of further US monetary tightening and ongoing geopolitical uncertainties. Meanwhile, the retreat in oil prices could provide some near-term relief to sentiment, while investors will continue to monitor crude oil prices, US Treasury yields and developments surrounding the US-China summit. We expect investors to remain selective, with bargain hunting focused on fundamentally resilient counters.

Sector focus. Technology stocks should remain in focus following the strong rebound in global AI and semiconductor stocks, while Utilities counters could attract interest after outperforming the broader market. Construction and Plantation may remain selective plays, supported by ongoing project activity and elevated CPO prices, respectively.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI rebounded slightly after three consecutive sessions of declines, but remains below its EMA9, EMA20, EMA120 and SMA200, indicating that near-term momentum remains weak. The index has yet to reclaim the 1,680 level, while the lower boundary of the descending trend channel around 1,650 remains the key support. A break below this level could lead to further downside.

Company News

Pekat Group Bhd will lease about 470 acres in Sungai Petani for 24 years to develop renewable energy projects, including solar PV and battery energy storage systems. (The Edge)

Gamuda Bhd secured a 50% share of the A$624m (RM1.8bn) Western Sydney road upgrade contract, worth about RM908m, with completion targeted by 2030. (The Edge)

Southern Score Builders Bhd secured a RM40m subcontract for electrical works at a Nilai data centre, covering supply, installation, commissioning, maintenance and warranty services. (The Edge)

Powerwell Holdings Bhd secured two contracts worth RM190.42m to supply low-voltage switchgear and related equipment for a Johor data centre project. (The Edge)

Straits Energy Resources Bhd proposed a share capital reduction to eliminate RM90m of accumulated losses, including RM39.17m at group level as of June 30, 2026. (The Edge)

CTOS Digital Bhd appointed Putri Norlisa Najib, eldest daughter of former PM Najib Razak, as an independent non-executive director effective Sept 25. (The Edge)

Dialog Group Bhd obtained PETRONAS approval for its US$81m (RM330.29m) RAJA Cluster field development and abandonment plan, with Dialog holding 100% participating interest and operatorship. (The Edge)

Excel Force MSC Bhd proposed a private placement of up to 60.99m shares to raise RM10.98m, mainly for working capital and a software project. (The Edge)

M&A Equity Holdings Bhd redesignated Thong Mei Chuen as non-executive chairperson, effective Monday; she is the daughter of businessman Datuk Seri Thong Kok Khee. (The Edge)

Winstar Capital Bhd proposed a RM300m sukuk murabahah programme to fund investments, land acquisitions, refinancing and working capital, with a 30-year tenure. (The Edge)

Inspace Creation Bhd secured a RM34.75m subcontract for renovation works on commercial properties, with project details undisclosed due to confidentiality. (The Edge)

• Exports accelerated to +45.5% YoY in August (Jul: +38.0%), while imports remained robust at +41.1% (Jul: +36.3%). The trade surplus widened to RM28.1bn (Jul: RM22.5bn).

• Manufacturing and LNG drove export growth, partly offset by weaker agriculture.

• Strong intermediate goods imports point to firm order pipelines, which should support near-term industrial and export activity.

• We expect exports to remain supported by the tech upcycle and potential trade diversion.

• Headwinds include an unfavourable base effect, renewed Middle East tensions and uncertainty surrounding US trade policy.

• We maintain our 2026 export growth forecast at +26.2% YoY (2025: +6.6%).

Sustained trade resilience

Malaysia’s exports accelerated to +45.5% YoY in August (Jul: +38.0%), well above Bloomberg consensus of +38.0%. Import growth also rose to +41.1% (Jul: +36.3%), driven by stronger intermediate and capital goods imports. Consequently, the trade surplus widened to RM28.1bn (Jul: RM22.5bn). On a YTD basis, exports and imports grew +31.2% and +22.4% respectively (8M25: +4.1% and +3.7%), underscoring sustained trade resilience.

Manufacturing-led expansion

Manufacturing exports accelerated (+50.4% YoY; Jul: +42.6%), lifted by a robust E&E print (+66.5%; Jul: +51.0%) amid the sustained AI-led global tech upcycle. Non-E&E manufacturing also strengthened (+35.1%; Jul: +33.5%), driven by metal (+35.4%; Jul: +23.3%), transport equipment (+34.1%; Jul: +15.4%) and petroleum products (+21.7%; Jul: +26.9%). Commodity exports remained mixed. Mining exports surged (+43.3% YoY; Jul: +9.6%), supported by firmer LNG (+51.8%; Jul: +14.1%) and a sharp improvement in crude petroleum (-19.3%; Jul: -79.4%), though we note the volatile trend in energy-related exports. In contrast, agriculture exports declined (-21.4%; Jul: +4.8%), dragged by weaker palm oil exports (-25.0%; Jul: +7.7%) amid lower export volumes.

By destination, exports to the US (+130.4% YoY; Jul: +79.8%), Singapore (+58.5%; Jul: +16.5%) and Taiwan (+102.2%; Jul: +96.0%) strengthened markedly, likely driven by E&E products. Meanwhile, shipments to selected trading partners moderated, including China (+19.9%; Jul: +30.1%), EU (+20.0%; Jul: +37.0%) and ASEAN markets such as Thailand (+33.2%; Jul: +37.5%), Vietnam (+28.3%; Jul: +77.4%) and Indonesia (+11.5%; Jul: +35.0%).

Indication of strong order pipeline

Capital goods imports expanded for the third straight month (+37.4% YoY; Jul: +23.8%), pointing to sustained investment appetite. Data-centre expansions and ongoing infrastructure projects should continue to support investment activity. Meanwhile, intermediate goods imports accelerated further (+50.5%; Jul: +40.8%), driven by accessories of capital goods (+101.6%; Jul: +96.1%) and fuel & lubricants (+92.2%; Jul: -16.3%). We view the strength in intermediate imports as an indication of firm order pipelines, with manufacturers securing critical industrial inputs for future production.

Prospects remain intact

We maintain our 2026 export growth forecast at +26.2% YoY (2025: +6.6%). Going forward, we remain particularly positive on the E&E sector, underpinned by structural growth in AI, EVs and other related industrial segments. Meanwhile, energy-related exports should provide additional support, as Malaysia remains a beneficiary of potential trade diversion arising from the Middle East conflicts. The robust growth in intermediate imports is also typically an indication of a strong orderbook and near-term strength in industrial and export activity. That said, exports are likely to face headwinds in the remaining months of 2026 due to an unfavourable high base in the corresponding period last year. Downside risks include a renewed flare-up in Middle East tensions that could disrupt global trade flows, as well as continued uncertainty surrounding US trade policy. Malaysia remains vulnerable to higher tariffs, with the US Section 301 investigation into structural excess capacity and production still underway.

• Headline inflation edged up to +1.9% YoY in August (Jul: +1.8%), driven by higher transport and electricity costs.

• Core inflation eased further in August, pointing to subdued underlying price pressures.

• We maintain our 2026 and 2027 inflation forecasts at +2.0% YoY, with upside risks from elevated commodity prices, business cost pass-through and El Niño.

• Subsidy policy adjustments should keep price pressures in check, supporting household purchasing power and domestic spending.

• We expect BNM to keep the OPR at 2.75% in 2026, before raising it to 3.00% in 2027.

Modest pickup in inflation

Malaysia's headline inflation edged up to +1.9% YoY in August (Jul: +1.8%), marginally above consensus of +1.8%. On a month-on-month basis, inflation rose to +0.3% MoM (Jul: 0.0%), pointing to some intermittent buildup in price pressures amid volatility in global energy prices and geopolitical uncertainties.

Price gain was driven mainly by transport (+2.0% YoY; Jul: +1.4%), reflecting higher petrol (+2.1%; Jul: +1.1%) and a slower decline in diesel prices (-10.9%; Jul: -11.5%). Pump prices rose month-on-month, with unsubsidised RON95 (RM3.75/litre; Jul: RM3.47/litre), RON97 (RM4.28/litre; Jul: RM4.07/litre) and diesel (RM4.60/litre; Jul: RM4.14/litre) all rising. Meanwhile, electricity picked up to +3.6% (Jul: +2.2%), due mainly to a higher electricity surcharge under the Automatic Fuel Adjustment (AFA) mechanism (3.80 sen/kWh; Jul: 3.59 sen/kWh).

Subdued underlying price pressures

Core inflation eased further to +1.7% YoY (Jul: +1.8%), the lowest since Dec-24, pointing to subdued underlying price pressures. The gradual downtrend in core inflation from +2.3% in January suggests some moderation in domestic demand pressures. That said, core inflation remained steady at +2.0% year-to-date (2025: +2.0%). On a month-on-month basis, core inflation rose +0.3% MoM (Jul: 0.0%).

Subsidy measures to cushion upside risks

We maintain our 2026 and 2027 inflation forecasts at +2.0% YoY. Near-term inflation risks remain tilted to the upside, mainly from cost-related pressures. Brent crude has remained above USD100/bbl since early September following a flare-up in the Middle East conflict. Supply concerns have also intensified following the shutdown of Saudi Arabia’s East-West pipeline, with repairs reportedly taking up to five weeks.

Geopolitical tensions and elevated oil prices are likely to lift domestic transport inflation, while higher shipping and procurement costs could feed through to broader inflation. Elevated commodity prices could also keep electricity costs high in the near term. These pressures have pushed producer inflation higher to +9.7% YoY in July (Jun: +9.2%). The risk of passthrough to consumer prices remains, although spillovers appear limited at this juncture. We also remain vigilant over El Niño, which could add to food inflation. Notwithstanding the upside risks, inflation has remained mostly sub-2.0% even amid the Middle East conflict, reflecting subsidy policy adjustments that have kept price pressures in check. The government recently restored the BUDI95 monthly quota to 300 litres and raised the BUDI diesel quota to 400 litres effective September. Meanwhile, the household electricity subsidy threshold has been raised to 800 kWh/month from 600 kWh until 31 December, cushioning households from higher electricity costs amid hazier weather conditions. These measures should help preserve household purchasing power and support domestic spending.

One 25-bp hike in 2027

Overall, the still-benign inflation outlook suggests no urgency for BNM to adjust monetary policy at this juncture, supporting our expectation for BNM to keep the OPR on hold at 2.75% at its upcoming November MPC meeting. Further out, given the positive domestic economic outlook, steady inflation and monetary tightening in major advanced economies, we expect BNM to raise the policy rate by 25 bps in 2027, normalising the OPR to 3.00%.

Malaysian Market Review. The FBM KLCI fell (-0.55%) to 1,665.56 on Friday, as persistent foreign selling amid a hawkish Federal Reserve stance and elevated US Treasury yields weighed on selected index heavyweights. Market breadth turned positive, with 625 advancers against 564 decliners, while 505 counters were unchanged. Sector-wise, Technology (+2.50%), Construction (+2.20%) and Transportation & Logistics (+0.71%) led the gains, while Property (-1.62%), REIT (- 0.65%) and Financial Services (-0.63%) were the top laggards.

Global Markets: U.S. equities ended mixed overnight, with the Dow Jones Industrial Average falling (-0.18%), while the S&P 500 (+0.17%) and Nasdaq Composite (+0.39%) edged higher, as rising Treasury yields continued to weigh on equities following the Federal Reserve's 25bps rate hike earlier this week. The 10-year US Treasury yield rose back above 5% to 5.006%, while elevated oil prices also remained a concern, with Brent crude declining 0.69% to US$103.37/bbl. Technology stocks remained relatively resilient, with investors continuing to focus on the AI growth outlook despite expectations for a higher-for-longer interest rate environment. In Europe, the STOXX Europe 600 fell -1.11%, with broad-based selling across most sectors. Across Asia, markets ended mostly higher on Friday, with South Korea's Kospi surging (+2.66%), Japan's Nikkei 225 gaining (+1.38%), Hong Kong's Hang Seng Index rising (+0.60%) and China's Shanghai Composite advanced (+0.94%) (CNBC).

Market Outlook. We expect the FBM KLCI to remain cautious and trade in consolidation mode in the near term, as persistent foreign selling, a stronger US dollar and expectations of further US monetary tightening could continue to cap market sentiment. Meanwhile, elevated oil prices and developments in the Middle East could keep inflation expectations and global bond yields elevated, while movements in US Treasury yields remain key to emerging-market fund flows. On the domestic front, the recent correction has brought valuations to more attractive levels, which could encourage bargain hunting and selective buying in blue-chip counters. We also expect investors to favour sectors with resilient earnings and stronger domestic or commodity-linked exposure amid the uncertain external environment.

Sector focus. Technology stocks should remain in focus, supported by resilient AI and semiconductor demand, while easing oil prices and the recent rebound in global technology stocks could continue to provide near-term sentiment support. Meanwhile, Construction counters may remain on investors' radar, underpinned by ongoing infrastructure, utilities and data-centre projects. Plantation stocks could also attract interest amid elevated CPO prices.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI extended its decline to close at 1,665.56, remaining firmly below its EMA9, EMA20, EMA120 and SMA200, which continues to point to weak near-term momentum. The index has also failed to reclaim the 1,680 level and is now approaching the key support level of 1,655. A decisive break below 1,655 could accelerate the downward momentum and expose the lower boundary of the descending trend channel. Overall, the index remains within the broader downward trend channel that has capped the upside since February.

Company News

AirAsia Group Bhd said its operations remain sustainable with over RM1 billion in cash, while group adviser Tan Sri Tony Fernandes dismissed concerns over its financial position and said no government bailout had been requested. (The Edge)

Capital A Bhd has proposed a debt restructuring scheme involving Move Digital that could see it divest all or most of its stake in BigPay and its 13.6% stake in Tune Protect to address historical liabilities. (The Edge)

KYM Holdings Bhd plans to acquire a 70% stake in Regen Healthcare for up to RM33.5 million as part of its diversification into the healthcare sector. (The Edge)

TMK Chemical Bhd has agreed to acquire Chemical Company of Malaysia from Batu Kawan for RM939.9 million, comprising RM438.5 million cash and new TMK shares that will give Batu Kawan a 20.8% stake. (The Edge)

Tenaga Nasional Bhd will absorb the estimated RM150 million impact from the expanded electricity tariff subsidy exemption for eligible households through year-end. (The Edge)

Vestland Bhd has secured a RM107.61 million contract for slope mitigation works in Terengganu, lifting its outstanding order book to RM2 billion. (The Edge)

Eco World Development Group Bhd has won a tender to develop a prime residential site in Singapore for S$208.1 million, or about RM667.6 million. (The Edge)

Zetrix AI Bhd has postponed its cash dividend payout after a court injunction prevented the company from distributing cash dividends to certain accounts linked to a substantial shareholder. (The Edge)

Jati Tinggi Group Bhd has secured a RM72.84 million contract to design and build a 275kV highvoltage cable connection for a data centre in Selangor, marking its third contract win in a month. (The Edge)

Malaysian Market Review. The FBM KLCI eased 4.47 points, or 0.27%, to close at 1,674.74 on Thursday from Tuesday's close of 1,679.21, with market breadth remaining negative as decliners outpaced gainers 673 to 465. The future rate-path of the Federal Reserve has indicated further monetary tightening which has led to concerns over the global interest rate outlook and weighed on local sentiment. Technology (+1.42%), Utilities (+0.73%), and Property (+0.33%) led gains while Telecommunications and Media (-1.13%), Industrial Products (-0.83%), and Healthcare (-0.79%) led the decliners.   

Global Markets: Wall Street rebounded on Thursday, with the Dow rising 0.61% to 51,778.04, while the S&P 500 gained 1.14% to 7,637.76 and the Nasdaq surged 1.69% to 26,418.30, as investors look past the Federal Reserve’s hawkish rate hike. Initial jobless claims unexpectedly fell to 196,000 from 206,000, below expectations of around 207,000, reinforcing signs of resilience in the US labour market. Brent crude fell as reports of additional Saudi crude supply through Oman eased immediate concerns over Middle Eastern supply disruptions. The STOXX 600 gained 0.86% to 642.6. The Bank of England kept its policy rate unchanged at 3.75% in a 6-3 vote, although Governor Andrew Bailey warned that prolonged Middle East tensions and second-round inflation effects could necessitate further tightening. Asian markets were mixed following the Fed’s rate hike, with Japan’s Nikkei 225 gaining 0.33% while South Korea’s KOSPI edged 0.04% lower and Hong Kong’s Hang Seng declined 0.44%.

Market Outlook. We expect the FBM KLCI to trade cautiously with a slight positive bias in the near term, taking cues from the overnight rebound on Wall Street and easing crude oil prices. Nonetheless, upside may remain constrained as investors digest the Federal Reserve’s signal for further monetary tightening. Domestically, persistently weak market breadth suggests underlying risk appetite remains soft despite relatively modest declines in the benchmark index, which could limit the sustainability of any broad-based rebound. Overall, we expect selective bargain-hunting to emerge following recent weakness, but the KLCI is likely to remain range-bound until greater clarity emerges on the global rate trajectory and Middle Eastern geopolitical risks.

Sector focus. The easing in crude oil prices could provide some relief to energy-intensive sectors such as Transportation & Logistics and Construction, but may temper near-term momentum in Energy. Conversely, Plantations are expected to continue to see interest given indirect CPO price support.

Technical Commentary: The FBM KLCI eased yesterday to close at 1,674.74, continuing its downtrend. The index has continued to remain below its EMA9, EMA20 and EMA120, with the recent price action indicating a resumption of downward momentum. The current close below the support level of 1,680 has led to a retest of the 1,655 - 1,675 support zone. The failure to hold this zone at 1,655 could lead to further downward momentum. Overall, the index is still moving within the downward trend channel that has limited gains since February.

Company News 

Construction group Binastra Corp Bhd saw its 2QFY2027 net profit surge nearly 80% to RM50.6 million from RM28.4 million a year earlier, as revenue jumped 66% to RM658.4 million, driven by stronger construction activity, contributions from newly acquired thermal energy firm LF Lansen Sdn Bhd and its expansion into solar installation. (The Edge)

Reservoir Link Energy Bhd has signed a 30-year power purchase agreement with Syarikat SESCO Bhd for a 200MWac solar photovoltaic project in Tinjar, Sarawak, with an estimated development cost of RM570 million. (The Edge)

Batu Kawan Bhd has raised its stake in MKH Oil Palm (East Kalimantan) Bhd to 79.58% after its mandatory general offer (MGO) at 66.26 sen per share concluded on Thursday. (The Edge)

Zetrix AI Bhd founder Wong Thean Soon has ceased to be a substantial shareholder in Cuscapi Bhd after disposing of about 103.6 million shares, or nearly an 11% stake, for up to RM5.18 million, based on Cuscapi’s Sept 11 closing price. (The Edge)

Bintulu Port Holdings Bhd has secured a 30-year concession to continue operating Bintulu Port following its handover to the Sarawak state administration. (The Edge)

Glomac Bhd returned to the black in 1QFY2027, posting a net profit of RM7.6 million compared with a net loss of RM1.42 million a year earlier. (The Edge)

Mechanical and civil engineering firm Enproserve Corp Bhd has secured a RM12.31 million contract from Perbadanan Putrajaya to manage and maintain government quarters in Precinct 8, Putrajaya. (The Edge)

Malaysian Market Review. The FBM KLCI eased 18.80 points, or 1.11%, to close at 1,679.21 on Tuesday, from Monday's close of 1,698.01, with market breadth remaining negative as decliners outpaced gainers 780 to 355. Selling pressure had resumed as local and global markets were cautious ahead of the US Federal Open Market Committee rate decision. Energy (+0.79%) led gains while Industrial Products (-1.48%), Healthcare (-1.45%), and Utilities (-1.42%) led the decliners.  

Global Markets: Wall Street ended lower on Wednesday after the Federal Reserve raised its benchmark interest rate by 25bps to 3.75%-4.00%, its first hike since 2023, while signalling that further tightening may be required to bring inflation back towards target. The Dow fell 1.21%, to 51,461.90, while the S&P 500 declined 0.45% to 7,551.81 and the Nasdaq edged 0.01% lower to 25,978.43. Fed Chair Kevin Warsh noted that the US economy had strengthened but inflation remained elevated, while policymakers projected one further rate increase this year. Brent crude nevertheless fell after reports that Saudi Arabia was offering additional crude cargoes through Oman eased concerns surrounding Middle Eastern supply disruptions. Ahead of the Fed decision, the STOXX 600 gained around 0.46% to 637.09 as easing oil prices provided some relief from recent inflation concerns. Asian markets also traded mostly higher ahead of the Fed decision, with Japan's Nikkei 225 rising 0.69%, South Korea's KOSPI gaining 1.37% and Hong Kong's Hang Seng edging 0.19% higher, supported by bargain-hunting in technology and semiconductor stocks.

Market Outlook. We expect the FBM KLCI to trade with a cautious to negative bias in the near term following the Fed’s 25bps rate hike and guidance for further tightening. The prospect of another rate increases this year, together with still-elevated global bond yields, is likely to keep risk appetite subdued and may continue to pressure rate-sensitive sectors. Locally, Tuesday’s decline alongside weak market breadth suggests selling pressure remains relatively broad-based, although the recent pullback may encourage selective bargain-hunting at lower valuations. Overall, we expect the KLCI to remain volatile and range-bound, with upside likely capped until there is greater clarity on the path of US monetary policy and global inflation.

Sector focus. The easing in crude oil prices could provide some relief to energy-intensive sectors such as Transportation & Logistics and Construction, but may temper near-term momentum in Energy. Recent developments in AI-related sentiment may continue to pressure the local Technology sector. Conversely, Plantations are expected to continue to see interest given indirect CPO price support.

Technical Commentary: The FBM KLCI eased on Tuesday to close at 1,679.21, resuming its downtrend after a day of gains. The index has continued to remain below its EMA9, EMA20 and EMA120, with the recent price action indicating a resumption of downward momentum. The current close below the support level of 1,680 is expected to see a retest of the 1,655 - 1,675 support zone. Overall, the index is still moving within the downward trend channel that has limited gains since February.

Company News

AirAsia Group Bhd is seeking to renegotiate terms on a US$200 million (RM814.5 million) private credit loan from Ares Management Corp and Indies Capital Partners, following two consecutive quarterly losses. (The Edge)

Eco World Development Group Bhd has emerged as the top bidder for a residential site at Lorong Puntong/Sin Ming Avenue in Singapore, with an offer of S$208.1 million (RM667.62 million). (The Edge)

KPJ Healthcare Bhd has discontinued its lawsuit with costs against seven of 11 former directors linked to the RM119.92 million sale of a 49% stake in Lablink (M) Sdn Bhd in 2018. (The Edge)

YTL Power International Bhd has acquired four additional gas turbine units from Siemens Energy, expanding its total reservations to seven units with a combined capacity exceeding 5,250MW. (The Edge)

An individual named Tan Boon Seng has emerged as a substantial shareholder of Cuscapi Bhd, after purchasing a 10.618% interest in the company via a direct business transaction as existing shareholders exit. (The Edge)

The takeover offer for Hextar Retail Bhd has turned unconditional after major shareholders, led by offeror Hextar Portfolio Sdn Bhd and Datuk Ong Choo Meng, collectively secured a 51.03% controlling stake through valid acceptances, existing holdings and external acquisitions. (The Edge)

Pestech International Bhd said it only learned of a winding-up petition filed by its China-based supplier, Shandong Power Equipment Co Ltd, after being alerted by Bursa Malaysia, who forwarded a copy of the notice that was advertised in two Malaysian newspapers. (The Edge)

Butterfield FB Bhd ended its maiden day trade on the ACE Market on Tuesday at 46 sen, two sen or 4.17% lower than its initial public offering price (IPO) of 48 sen. (The Edge)

Crest Builder Holdings Bhd said its unit has won a mechanical and electrical (M&E) subcontract worth RM56.88 million from a unit of construction company Pesona Metro Holdings Bhd. (The Edge)

PTT Synergy Group Bhd’s unit has secured a contract worth RM83.26 million from Sime Darby Property Sdn Bhd for earthworks and related tasks for multiple packages in the first phase of Bandar Bukit Raja Stage 4 in Klang, Selangor. (The Edge)

Frontken Corp Bhd's 93.4%-owned subsidiary Ares Green Technology Corp (AGTC) has won the tender for an industrial property in Tainan, Taiwan, for NT$920 million (RM118.16 million). (The Edge)

UUE Holdings Bhd is establishing a joint venture with a unit of Singapore-listed EGP Energy Corporation Ltd to develop and deliver power-grid infrastructure, including extra-high voltage (EHV) electrical systems. (The Edge)

·   The Fed voted unanimously to raise the policy rate by 25bps to 3.75-4.00%, supporting a timelier return to its 2.0% inflation target.

·   The dot plot signals another 25-bp rate hike this year, followed by a steady rate in 2027.

·   We now expect another 25-bp hike in October, followed by one further rate hike in 2027.

·   While we expect BNM to raise the OPR by 25 bps in 2027, the larger increase in the Fed funds rate would put some pressure on the ringgit. We maintain our projection for USDMYR to average 4.03 this year, before moderating modestly to 4.15 in 2027.

The beginning of tightening cycle       

The Federal Reserve (Fed) voted unanimously (12-0) to raise the federal funds target range by 25bps to 3.75-4.00%. This marks the first hike since Jul-23 and likely signals the start of a new tightening cycle, underscoring the Fed’s pivot towards reining in elevated inflation pressures as the economy and labour market strengthened.

Fed’s focus on quelling elevated inflation

The Fed’s decision to hike was guided by its assessment that the economy has strengthened while inflation has remained “too high and has been for too long”, with today’s rate hike “supporting a timelier return” to its 2.0% inflation target. While acknowledging that monetary policy cannot address supply-driven inflation shocks, Chair Warsh stressed that the Fed will prevent inflation from broadening and generating secondary effects.

He noted that fighting inflation does not require inflicting harm on the labour market, arguing that bringing inflation under control would support more sustainable growth. His remarks suggest that the Fed is focused on the broader inflation trend, while willing to tolerate some slight moderation in economic activity in pursuit of more sustainable growth, in our view.

Fed increasingly hawkish

The dot plot now signals another 25 bps of rate hike by end-2026 (median: 4.1%), taking the policy rate to 4.00%–4.25%, followed by no change in 2027 (median: 4.1%). This represents roughly one extra 25-bp hike in 2026 versus the July projection. The Fed’s baseline outlook is also consistent with its policy action. GDP growth and inflation for 2026 have been revised up, while the unemployment forecasts are now lower (Fig. 3).

Labour market steady; inflation increasingly a concern

The labour market surprised on the upside. Nonfarm payrolls increased by +162k in August (consensus: +56k), while July job gains were revised higher to +21k. The stronger-than-expected job growth was driven mainly by a rebound in leisure and hospitality employment. Meanwhile, the unemployment rate remained steady at 4.1% (Jul: 4.1%), pointing to continued resilience in labour market conditions.

Meanwhile, inflation remains sticky. Headline CPI rose +0.4% MoM in August (Jul: +0.1%), reflecting a rebound in energy prices. Core CPI increased +0.3% (Jul: +0.2%), above market expectations of +0.2%, reinforcing concerns over underlying price pressures. With Brent price remaining above USD100/bbl, US diesel price has surged 71% YoY to USD6.31/gallon, raising business costs and concerns over broader pass-through to consumer prices.

Revise to two rate hikes in 2026

Inflation concerns alongside elevated Treasury and corporate bond supply have pushed the Treasury curve higher in recent weeks. The 10-year UST yield breached 5% on 15 September, the highest since October 2023, before retreating to around 4.97%. The rise in long-end yields signals growing market concerns over the inflation outlook, putting pressure on the Fed to deliver on its commitment to tame inflation. Failure to act decisively risks undermining the Fed’s credibility, in our view.

We therefore expect the Fed to shift to an increasingly hawkish stance, despite President Trump’s calls for lower rates. The 25-bp rate hike in September is in line with our view, but recent developments in inflation and the yield curve strengthen our conviction that the Fed will remain hawkish beyond the September meeting. We therefore do not expect the September hike to be a “one-and-done” move, but rather the start of a tightening cycle extending into 2027.

We now expect two 25-bp rate hikes in 2026 (previously: one rate hike), with another hike in October taking the fed funds target range to 4.00-4.25%, followed by one further rate hike in 2027 to 4.25-4.50%.

Slight moderation for ringgit in 2027

As such, UST yields should retain a mild upward bias. Together with safe-haven demand amid elevated geopolitical tensions, this should keep the US dollar supported. The dollar index has risen 2.2% MTD to 99.6, but remains below its 101.6 peak in June. We believe there is still room for the dollar index to move above 100 heading into 2027.

Closer to home, we expect BNM to raise the OPR by 25 bps in 2027, normalising the policy rate to 3.00%. While this should provide some support to the ringgit, the larger increase in the Fed funds rate would widen US-Malaysia interest rate differentials and put some pressure on the ringgit. We maintain our projection for USDMYR to average 4.03 this year (2025: 4.28), before moderating modestly to 4.15 in 2027.

Malaysian Market Review. The FBM KLCI gained 11.27 points, or 0.67%, to close at 1,698.01, from Monday's close of 1,686.74, with market breadth remaining negative as decliners outpaced gainers 764 to 421. Market participants had taken the opportunity to engage in value-buying owing to comparatively more attractive valuations amidst recent declines. Telecommunications & Media (+1.24%), Plantation (+1.06%), and Finance (+0.86%) led the gainers while Technology (-1.86%) and Construction (-0.98%) led the decliners.  

Global Markets: Wall Street declined on Monday, with the Dow falling or 0.29%, to 52,421.20, while the S&P 500 slid 0.48% to 7,619.98 and the Nasdaq dropped 0.56% to 26,186.41, as rising oil prices, higher Treasury yields and weakness in AI-related stocks weighed on sentiment. The US 10-year Treasury yield briefly breached 5% for the first time since 2023 as investors increasingly priced in tighter monetary policy, with markets assigning around a 90% probability of a 25bps Fed rate hike this week. Brent crude prices rose amid continued concerns over potential disruptions to Middle Eastern oil supplies. European markets similarly weakened, with the STOXX Europe 600 declining 0.49% to around 635.99 points as losses in technology stocks and rising bond yields outweighed support from selected defensive sectors. Meanwhile, Asian markets were mixed on Monday with South Korea's KOSPI falling 3.26% and Japan's Nikkei 225 declining 0.81%, while Hong Kong's Hang Seng gained around 0.45%. The sell-off in Asian technology stocks followed calls from Anthropic CEO Dario Amodei for a slower pace of AI development, while elevated oil prices added to concerns over inflation and monetary tightening.  

Market Outlook. We expect the FBM KLCI to trade cautiously with a slight negative bias in the near term, as bargain-hunting following recent declines is likely to be tempered by persistent external headwinds in addition to cautious sentiment ahead of the Malaysia Day Holiday. While Tuesday’s rebound suggests some underlying buying interest at current valuations, weak market breadth indicates that the recovery remains relatively narrow. Elevated crude oil prices, the US 10-year Treasury yield breaching 5% and growing expectations of tighter US monetary policy are likely to continue weighing on risk appetite. Overall, we expect the KLCI to remain range-bound, volatile, and with a slight negative bias in the near term, with upside likely capped due to the global interest-rate outlook and Middle Eastern supply risks.

Sector focus. Recent developments in AI-related sentiment may induce pressure on the local Technology sector, while higher energy prices could also weigh on energy-intensive industries such as Transportation & Logistics and Construction. Conversely, Plantations are expected to continue to see interest given indirect CPO price support.

Technical Commentary: The FBM KLCI gained on Monday to close at 1,698.01, rebounding from a recent low of 1,682.49. The index has continued to remain below its EMA9, EMA20 and EMA120, with the recent rebound indicating a small relief in downward momentum. A retest of the 1,700–1,718 resistance zone is expected. Failure to secure a decisive close above this range may see the index drift lower towards the immediate support level of 1,680. For the rebound to look more convincing, the index needs to move back above all of the EMAs. Overall, the index is still moving within the downward trend channel that has limited gains since February.

Company News

Kelington Group Bhd has secured a contract worth a provisional RM1.83 billion that marks the largest ever job for the engineering services firm. (The Edge)

NuEnergy Holdings Bhd said it is investing in solar photovoltaic (PV) facilities worth RM48.8 million across 49 rooftop sites at the premises of a government agency. (The Edge)

GFM Services Bhd said on Monday it has received an additional release order worth RM37.4 million for major turnaround works at the Pengerang Integrated Complex in Johor. (The Edge)

Exsim Hospitality Bhd has secured RM42.48 million worth of subcontract works to supply, install, test and commission building services and carry out general building works. (The Edge)

Kerjaya Prospek (M) Sdn Bhd, a wholly owned subsidiary of Kerjaya Prospek Group Bhd, has been awarded a RM37.82 million contract from Persada Mentari Sdn Bhd related to an affordable housing project in Penang. (The Edge)

PETRONAS Chemicals Group Bhd rose to a three-month high amid a rally in petrochemical refiners as oil prices surged amid renewed conflict in the Middle East. (The Edge)

Tan Chong Motor Holdings Bhd has signed a three-year agreement with Perodua to support its battery electric vehicle project in Serendah. (The Edge)

United Asiapac Energy Bhd ended its first trading day on the ACE Market 11.4% lower than its opening price on Monday. (The Edge)

Malaysian Market Review. The FBM KLCI declined 18.78 points, or 1.10%, to close at 1,686.74, from Thursday's close of 1,705.52, with market breadth remaining negative as decliners outpaced gainers 809 to 427. While domestic fundamentals remain intact, sentiment was driven by external factors, with the Middle-East conflict remaining elevated and dual concerns on higher bond yields and elevated energy costs showing little signs of subsiding. Construction (-1.74%), Utilities (-1.68%), and Finance (-1.42%) led the decliners while Healthcare (+0.49%%) and Telecommunications & Media (+0.08%) were the only gainers.

Global Markets: Wall Street rebounded on Friday, with the Dow rising 0.98% to 52,573.29, the S&P 500 gaining 0.86% to 7,656.98 and the Nasdaq advancing 0.96% to 26,333.04, as a pullback in crude oil prices and strength in technology stocks outweighed renewed rate concerns. August headline CPI rose 0.4% MoM and 3.4% YoY, broadly in line with expectations, although core CPI increased a stronger-than-expected 0.3% MoM versus the 0.2% forecast. European markets also recovered, with the STOXX Europe 600 rising 0.49% to 639.1 although the benchmark still recorded its sharpest weekly decline since early July amid elevated bond yields and inflation concerns. Asian markets were weaker ahead of the US inflation release, with Japan's Nikkei 225 falling 1.93%, South Korea's KOSPI declining 1.76% and Hong Kong's Hang Seng slipping around 0.6%, pressured by elevated oil prices and global bond yields. Over the weekend, further attacks on Saudi Arabia and vessels in the Strait of Hormuz continued, while the Saudi east-west oil pipeline remained offline following drone strikes, potentially putting as much as 4% of global oil supply at risk should the outage persist.

Market Outlook. We expect the FBM KLCI to trade with a cautious to negative bias in the near term, as external headwinds continue to overshadow otherwise resilient domestic fundamentals. Renewed geopolitical tensions in the Middle East, elevated crude oil prices and higher global bond yields are likely to keep risk appetite subdued, particularly for rate-sensitive and energy-intensive sectors. While Friday’s rebound on Wall Street could provide some initial support, the weekend escalation in geopolitical risks may limit follow-through buying. Investor attention will remain focused on this week’s heavy macro and central-bank calendar. Overall, we expect market volatility to remain high, with the KLCI likely to consolidate until there is greater clarity on the trajectory of global rates and the Middle East conflict.

Sector focus. Domestically, we expect selected beneficiaries of higher energy prices to remain relatively resilient with Plantation also seeing some interest given indirect CPO price support. Conversely, Construction, Utilities and Financials may continue to face pressure should bond yields stay elevated.

Technical Commentary: The FBM KLCI slipped further on Friday to close at 1,686.74, extending its retreat from recent highs near 1,760. The index has now fallen below its EMA9, EMA20 and EMA120, a break that signals that the near-term rebound has lost momentum. The close below 1,680 should now lead to a retest of 1,665, while failure to hold that level risks exposing the index to a slide back towards the 1,640–1,645 zone. For the rebound to look more convincing, the index needs to move back above all of the EMAs. Overall, the index is still moving within the downward trend channel that has limited gains since February.

Company News

Hextar Industries Bhd's RM177.48 million deal with Woodpeckers Group Sdn Bhd has fallen through after seven months. (The Edge)

Vestland Bhd has secured a RM410 million contract to undertake construction works for a mixed-use development on Jalan Ampang here. (The Edge)

Citaglobal Bhd has secured an RM82.1 million subcontract to design and build a new residential college at Institut Pendidikan Guru Kampus Bahasa Melayu in Lembah Pantai here. (The Edge)

PTT Synergy Group Bhd is acquiring a 3.925-hectare parcel of freehold land in Penang for RM62.53 million in cash. (The Edge)

Newly listed GTA Holdings Bhd is expanding its aviation support business into Brunei after securing an authorised distributorship from Safran Helicopter Engines Asia. (The Edge)

YNH Property Bhd has been given until Dec 31 to fulfil outstanding conditions for its RM170 million land sale to Sunway Bhd, failing which the purchaser will have the right to terminate the deal. (The Edge)

Cuscapi Bhd’s largest shareholder Wong Thean Soon, otherwise known as TS Wong, has more than halved his stake in the company over the past two weeks, as the forced selling of his shares hits a second listed company. (The Edge)

·   The unemployment rate held at 3.0% in July, reflecting stable labour market conditions.

·   Labour market outlook remains intact, underpinned by strength in household consumption, investment and external demand.

·   We remain wary of the impact of elevated cost pressures and an uncertain business operating environment on hiring momentum.

·   We maintain our unemployment rate forecast of 3.0% in 2026 (2025: 3.0%).

Steady labour market conditions   

Malaysia’s unemployment rate held at 3.0% in July, reflecting broadly stable labour market conditions amid firm domestic economic activity. Nonetheless, the number of unemployed rose for the fifth consecutive month to 520.3k (Jun: 517.8k), suggesting some underlying weakness that warrants close monitoring.

Employment growth inched up to +0.1% MoM (Jun: +0.01%), driven by continued hiring in the services sector, particularly “arts, entertainment and recreation”, “accommodation”, “food & beverage services” as well as “financial and insurance/takaful activities”. Employment also recorded gains across manufacturing, construction, agriculture and mining during the month.

By employment status, the number of employers (+0.3% MoM; Jun: +0.1%), employees (+0.1%; Jun: +0.02%) and self-employed persons (+0.3%; Jun: +0.04%) all increased during the month. The labour force rose +0.1% to 17.37m (Jun: 17.34m), while the labour force participation rate was unchanged at 70.9%.

Fundamentals remain intact

Looking ahead, we expect labour market conditions to remain broadly resilient. Policy support including cash assistance and subsidies should continue to sustain household consumption. Together with steady investment pipelines, these drivers are expected to underpin job creation. The Visit Malaysia 2026 campaign, which has now been extended to 2027, will provide further support to tourism-related hiring in accommodation, transportation and retail segments.

Employment prospects in the manufacturing sector also remain positive. The E&E segment, which accounts for c.27% of domestic manufacturing output, should continue to benefit from sustained AI upcycle into 2027. The latest Malaysia manufacturing PMI for August indicated that some firms increased hiring alongside an increase in new orders, albeit at a marginal pace, suggesting relatively steady employment conditions in the sector.

Separate data from SOCSO showed that loss of employment (LOE) eased to 7,526 in August (Jul: 9,013), the first improvement in four months. Meanwhile, job placements remained solid at 26,468 (Jul: 28,365), providing some cushion against job losses in the near term.

Wary of cost pressures on hiring

Despite the resilient labour market headlines, we remain wary of the recent volatility in hiring momentum. Lingering Middle East tensions, elevated energy prices and supply tightness remain key downside risks for businesses. Firms may adopt a more cautious approach to hiring amid elevated cost pressures and an uncertain operating environment. Previous PMI surveys indicated that firms might even consider reducing headcounts to lower operating costs.

Steady outlook ahead

Overall, employment prospects remain broadly intact for now. We maintain our unemployment rate forecast of 3.0% in 2026 (2025: 3.0%). Continued labour market resilience also supports our 2026 GDP growth forecast of +5.0% (2025: +5.2%).

Malaysian Market Review. The FBM KLCI declined 8.82 points, or 0.51%, to close at 1,705.52, from Wednesday's close of 1,714.34, with market breadth turning negative as decliners outpaced gainers 657 to 532. Sentiment weakened further as the escalating conflict around the Strait of Hormuz pushed crude oil prices higher, reviving concerns over another inflationary shock, with investors remaining cautious amid heightened geopolitical tensions and soaring energy costs that could continue to weigh on the market. Healthcare (+7.02%) and Industrial Products (+0.44%) led the gainers while Consumer (-0.82%) and Transportation & Logistic (-0.80%) topped the laggards. 

Global Markets: The Dow closed down 316.56 points, or 0.60%, to 52,064.10, the S&P 500 fell 0.58% to 7,591.70, while the Nasdaq slid 0.65% to 26,081.72. WTI closed at $102, up 6.7%, and Brent settled at $107, up 5.9%, both hitting their highest close since May, pushing the 10-year Treasury yield above 4.95%, its highest since October 2023. High-beta chip stocks led losses on fears higher rates and oil could slow the economy, with Intel sliding 5.6% and Micron falling 4.7%, while August PPI rose 0.4% as expected, failing to ease concerns ahead of Friday's key CPI report. Meanwhile, Europe's STOXX 600 tumbled 0.69% to 635.97, weighed down by escalating Middle East tensions and surging oil prices. Asian markets traded mixed on Thursday, with Japan's Nikkei 225 edging up 0.20% even as South Korea's KOSPI eased 0.25% and Hong Kong's Hang Seng fell 1.27%, as investors reassessed the impact of elevated oil prices and firmer US Treasury yields on regional growth and monetary policy outlooks (CNBC). 

Market Outlook. Thursday's PPI release was inconclusive in settling the "hike or no hike" debate, but WTI surging back above $100 and Treasury yields hitting new highs raise the stakes ahead of Friday's crucial CPI report. We stay cautious on near-term global risk appetite, as the combination of surging oil prices, rising Treasury yields, and an increasingly hawkish rate outlook creates a fragile backdrop heading into the pivotal inflation print and next week's Fed decision. For the KLCI, we expect sentiment to remain cautious in the near term, as elevated crude prices continue to raise cost pressures across the broader market, with investors awaiting greater clarity on the West Asia conflict and the US interest-rate outlook.

Sector focus. Energy counters may extend their gains as Brent crude holds above US$100 amid the escalating West Asia conflict, with Plantation also seeing some interest given indirect CPO price support. Conversely, Consumer and Transportation & Logistic may stay under pressure amid elevated energy costs. 

Technical Commentary: The FBM KLCI slipped further on Thursday, losing 8.82 points to close at 1,705.52, extending its retreat from recent highs near 1,760. The index has now fallen below its EMA9, EMA20 and EMA120, a break that signals that the near-term rebound has lost momentum and the broader uptrend structure is starting to weaken. A decisive break below 1,700 would open the door to a retest of 1,685, while failure to hold that level risks exposing the index to a slide back towards the 1,640–1,660 zone. For the rebound to look more convincing, the index needs to move back above the EMA9 and EMA20 and break above the 1,720–1,725 level. 

Company News 

IHH Healthcare Bhd’s Singapore unit Northern TK Venture (NTK) has lost its lawsuit seeking more than ¥200 billion (about RM5.3 billion) in damages from Japanese drugmaker Daiichi Sankyo Co Ltd after the Tokyo District Court on Thursday dismissed all of NTK’s claims and ordered the company to bear the litigation costs. (The Edge)

Lim Seong Hai Capital Bhd said the proposed Bandar Malaysia-Seri Kembangan Expressway (BSE) is estimated to cost RM1.75 billion to build, with a proposed concession period of 60 years including four years for construction, after receiving a government letter informing it that the Cabinet had agreed in principle to the highway project.(The Edge)

Alam Maritim Resources Bhd said an interim executive committee will oversee its operations after CEO Datuk Azmi Ahmad was placed on temporary garden leave amid graft charges. (The Edge)

Higher contributions from associate companies and stronger Mazda sales lifted Bermaz Auto Bhd’s net profit nearly fivefold in the first quarter. (The Edge)

Paragon Globe Bhd has secured a RM45.16 million contract from an unnamed data centre operator for earthworks and retaining wall works at a data centre development in Johor. (The Edge)

AME Elite Consortium Bhd has agreed to acquire four parcels of freehold land spanning 176.5 acres in Pontian, Johor, within the Johor-Singapore Special Economic Zone (JS-SEZ), for RM199.8 million in cash.(The Edge)

HE Group Bhd has secured an estimated RM25 million purchase order to undertake power distribution system works for a Malaysian manufacturer of NAND flash memory products. (The Edge)

Malaysian Market Review. The FBM KLCI eased 0.06 of a point to 1,714.34, from Tuesday's close of 1,714.40. The broader market was almost evenly balanced, with gainers leading decliners 551 to 531. Sentiment remains cautious as investors assess the potential economic impact of persistently elevated oil prices, particularly if higher energy costs translate into broader inflationary pressures and raise the prospects of monetary tightening. Construction (+1.59%) and Utilities (+1.39%) led the gainers while Finance (-0.50%) and REIT (-0.38%) topped the laggards. 

Global Markets: The Dow dropped 405.41 points, or 0.77%, to end at 52,380.66, the S&P 500 shed 0.48% to close at 7,636.36, while the Nasdaq Composite fell 0.64% to 26,253.34, as rising Treasury yields and oil prices continued to rattle investors. The 10-year Treasury yield jumped to 4.857%, its highest since November 2023, after the Treasury Department announced it would triple its debt buyback operation to $6 billion, while Brent crude surged 3.36% to $101 and WTI gained 3.25% to $96, both hitting their highest settle since May amid escalating US-Iran tensions. Meanwhile, Europe's STOXX 600 tumbled 1.41% to 640.41, weighed down by escalating Middle East tensions and surging oil prices. Asian markets traded mixed on Wednesday, with South Korea's KOSPI bucking the trend to rise 1.40% on continued strength in chipmakers, while Japan's Nikkei 225 slipped 0.19% and Hong Kong's Hang Seng eased 0.17%, as investors booked profits following the region's recent advance amid elevated oil prices and firmer US Treasury yields (CNBC).

Market Outlook. A sharp, sustained rise in oil prices is seen as a key threshold that would catch the market's attention, underscoring the level at which escalating energy costs could trigger a more meaningful market reaction. We stay cautious on near-term global risk appetite, as the combination of rising Treasury yields, driven partly by Treasury buyback dynamics, and surging oil prices amid escalating Middle East tensions creates a fragile backdrop, with the disconnect between extreme equity optimism and elevated rate-hike expectations posing a risk of a sharper correction should either the oil or inflation picture deteriorate further. For KLCI, we stay cautious on the local bourse in the near term, as persistently elevated oil prices continue to cloud the inflation outlook, with sentiment likely to remain guarded should higher energy costs translate into broader price pressures and raise the prospects of monetary tightening.

Sector focus. Energy counters may extend their gains as Brent crude climbs above US$100 per barrel amid escalating West Asia tensions. Plantation could also see some interest, with higher oil prices lending indirect support to CPO prices. Conversely, REIT and Property may continue to stay under pressure as inflation concerns and tighter monetary policy prospects weigh on sentiment. 

Technical Commentary: The FBM KLCI was little changed on Wednesday, dipping 0.06 points to close at 1,714.34 as the index stayed pinned below both its EMA9 and EMA20 for a third straight session. The index remains a good distance above its EMA120, but continues to trade within the same downward trend channel, which has limited gains since February. Support is seen at 1,700, with a break below opening the door to a retest of 1,685. The index needs to stay above the EMA9 and EMA20 and break above 1,720–1,725 to show that the rebound is more than just a temporary bounce. A break above 1,750–1,755 would be an even stronger sign that the overall trend is starting to change.

Company News 

Alam Maritim Resources Bhd group managing director and chief executive officer Datuk Azmi Ahmad will be charged at the Kuala Lumpur Sessions Court on Thursday. (The Edge)

Scientex Bhd posted a 29.54% year-on-year rise in 4QFY2026 net profit to RM199.92 million from RM154.33 million, driven by stronger contributions from its packaging and property divisions. (The Edge)

Kuala Lumpur Kepong Bhd has redesignated its chief operating officer Lee Jia Zhang as chief executive officer, effective Oct 1. (The Edge)

Bursa Malaysia has sought further clarification from Zetrix AI Bhd on its RM130 million valuation for the proposed acquisition of a 50% stake in MYEG Ventures Inc. (The Edge)

Separately, Zetrix AI co-founder and largest shareholder Wong Thean Soon’s selldown continues, with his stake falling to 13.14% after he and his investment vehicle Asia Internet Holdings sold 1.245 billion shares or a 16.35% stake for RM321.34 million. (The Edge)

Home furniture retailer SSF Home Group Bhd said Low Kok Yew has emerged as a substantial shareholder after raising his stake to above 5%.(The Edge)

LFE Corp Bhd has secured three contracts worth RM23.87 million for electrical, mechanical and plumbing works at an Ara Damansara redevelopment project. (The Edge)

Power engineering solutions provider EI Power Bhd is acquiring a freehold property in Bandar Glenmarie, Shah Alam for RM17.2 million as its new headquarters. (The Edge)

Enra Group Bhd has partnered with China Offshore Engineering & Technology Co Ltd to jointly bid for an upcoming Southeast Asian FPSO tender. (The Edge)

Ahmad Zaki Resources Bhd has appointed Datuk Seri Wan Zakariah Wan Muda as chairman, succeeding Tan Sri Madinah Mohamad, who has resigned to pursue personal interests. (The Edge)

Pimpinan Ehsan Bhd will be delisted on Sept 14 after failing to submit a plan to revive the company by the deadline. (The Edge)

• The Industrial Production Index (IPI) moderated to +4.7% YoY in July (Jun: +6.5%), below consensus of +5.6%, led by a sharp decline in mining.

• The AI-driven tech upcycle supports our broad optimism on the manufacturing outlook.

• We expect manufacturing activity to remain relatively firm in 2H26, ruling out a sharp deterioration at this juncture. 

• Key downsides include a high base effect from last year, elevated producer cost pressure, uncertain US trade policy and haze conditions.

• We keep our 2026 manufacturing growth forecast at +6.2% YoY (YTD: +6.5%; 2025: +4.5%).

July print below expectations 

IPI growth moderated to +4.7% YoY in July (Jun: +6.5%), undershooting market expectations of +5.6%. The softer print was driven by a contraction in mining (-3.2%; Jun: +3.1%), while manufacturing (+6.4%; Jun: +7.3%) and electricity output (+5.0%; Jun: +6.7%) slowed. On a month-on-month basis, IPI declined by 2.0% MoM, partly reflecting the seasonal moderation typically observed in July.

Mining sector a drag  

Mining fell on a sharp decline in petroleum (-13.1% YoY; Jun: -3.3%) and a slowdown in natural gas (+3.6%; Jun: +7.4%) output, resulting in a 0.6ppt drag on headline IPI growth (Jun: +0.5ppts). While the mining sector could benefit from elevated energy prices, we expect domestic mining activity to remain moderate in the coming months as base effects normalise.

Manufacturing remained the key growth driver, though moderating slightly to +6.4% YoY (Jun: +7.3%). The export-oriented cluster maintained its steady momentum, expanding +6.7% (Jun: +7.6%), supported by “electric & electronic products” (+13.3%; Jun: +13.6%), “machinery & equipment” (+14.6%; Jun: +10.6%) and “wearing apparel” (+2.8%; Jun: +0.2%), consistent with the improving external backdrop over the past year.

Meanwhile, the domestic-oriented cluster eased to +5.8% YoY (Jun: +6.4%). Softer momentum in “motor vehicles, trailers & semi-trailers” (+4.2%; Jun: +12.6%), “transport equipment” (+1.2%; Jun: +3.1%) and “paper & paper products” (+4.1%; Jun: +6.3%) was partly offset by firmer “food processing products” (+7.2%; Jun: +6.3%) and “basic pharmaceuticals, medicinal chemical & botanical products” (+8.3%; Jun: +6.4%).

Robust tech demand remains the key anchor 

The sustained strength in the external sector reinforces our broad optimism on the manufacturing outlook. In particular, the AI-driven technology upcycle should continue to lift Malaysia’s export-oriented segment, which accounts for c.46% of total manufacturing output. The Semiconductor Industry Association (SIA) projected global semiconductor sales to remain robust, reaching USD1.5tn in 2026 (2025: USD800bn) and USD1.9tn in 2027.

Steady outlook despite headwinds

Malaysia’s manufacturing PMI remained in expansion territory at 50.2 in August (July: 50.7). However, new orders continued to grow only marginally, contributing to a moderation in production. In addition, manufacturers reported that sufficient stock holdings led them to scale back buying activity. This reinforces our earlier view that the recent strength in industrial activity, partly driven by frontloading, is likely to wane in 2H26. Nonetheless, we expect manufacturing activity to remain relatively firm, ruling out a sharp deterioration at this juncture.

Other key downsides to Malaysia’s industrial production outlook include: i) high base from last year’s strong 2H25 performance; ii) elevated cost pressure for producers; iii) potentially unfavourable US trade policy; and to a lesser extent iv) haze conditions, which could disrupt logistics and lengthen raw material lead times.

Maintain growth forecast 

Manufacturing production grew at a solid +6.5% year-to-date. We thus maintain our 2026 manufacturing growth forecast at +6.2% YoY (2025: +4.5%), reflecting a steady albeit moderating production trend in 2H26 amid a more challenging and uncertain macro environment. We also maintain our 2026 GDP forecast at +5.0% (2025: +5.2%).

Malaysian Market Review. The FBM KLCI eased 0.39 of a point to 1,714.40, from Monday's close of 1,714.79. The broader market was evenly balanced, with decliners leading gainers 548 to 546. Across the region, major indices retreated as investors locked in profits, with sentiment also tempered by higher oil prices and firmer US Treasury yields, which reinforced concerns over inflation and the prospect of tighter monetary policy. Technology (+2.00%) and Construction (+1.93%) led the gainers while Healthcare (-1.02%) and Property (-0.53%) topped the laggards. 

Global Markets: The Dow dropped 628.18 points, or 1.18%, to close at 52,786.07, while the S&P 500 eased 0.58% to 7,673.52 and the Nasdaq fell 0.32% to 26,421.41. Oil prices continued climbing, with WTI rising for a sixth straight day and Brent settling near $98, after the U.S. and Iran exchanged blows over the weekend, pushing Treasury yields to multi-year highs and sharpening investor focus on this week's key US inflation data. Meanwhile, Europe's STOXX 600 slipped 0.05% to 649.60. Asian markets traded broadly lower on Tuesday, with South Korea's KOSPI falling 0.58% and Japan's Nikkei 225 dropping 1.70%, as investors locked in profits following the region's recent advance amid higher oil prices and firmer US Treasury yields, while Hong Kong's Hang Seng also eased 0.38% in line with the softer regional tone (CNBC).

Market Outlook. An upside surprise in the CPI reading would make it difficult for the Fed to avoid a rate hike, with investors' attention squarely focused on this week's inflation data as the key determinant of the Fed's next move. We stay cautious on near-term global risk appetite, as the combination of surging oil prices, rising Treasury yields, and escalating Middle East tensions creates a challenging backdrop heading into a pivotal inflation print and FOMC decision, even as resilient strength in semiconductors offers some offsetting support. For KLCI, external developments are likely to dictate near-term direction, with investors watching the Strait of Hormuz situation and Friday's US inflation data. We stay conservative on the KLCI this week, as the rotation into smaller-cap names suggests investors remain unwilling to commit meaningfully to index heavyweights amid persistent geopolitical and rate uncertainty, with upside likely capped until there's greater clarity on both the Hormuz situation and the Fed's policy path.

Sector focus. Construction and Technology counters may extend their gains, underpinned by continued rotation into smaller-cap names as investors take selective positions despite cautious broader sentiment. Energy counters could also stay in focus given elevated crude oil prices amid ongoing Strait of Hormuz tensions. Conversely, rate-sensitive sectors such as REIT and Property may continue to stay under pressure as investors position ahead of Friday's US inflation data. 

Technical Commentary: The FBM KLCI eased 0.39 points to close at 1,714.40, essentially flat as the index continues to consolidate below both its EMA9 and EMA20. The index is still well above its EMA120. However, the index continues to trade within the well-defined downward-sloping channel that has capped upside since the February peak, and yesterday’s pause reinforces the view that a more decisive move is needed before the recovery can be considered confirmed. Downside support sits at 1,700, and a slip below that level would put 1,685 back in play. A break above the 1,720–1,725 zone is needed to confirm more than a technical bounce, with the 1,750–1,755 zone remaining the key resistance to watch for a trend shift.

Company News 

Public Bank Bhd  is proposing to privatise its 73.23%-owned Hong Kong-listed subsidiary Public Financial Holdings Ltd (PFHL) for HK$2.50 per share, or about RM1.29, in cash. (The Edge)

Malayan Banking Bhd has received Bank Negara Malaysia approval to acquire the remaining 30.95% stake in Maybank Ageas Holdings Bhd, the holding company of Etiqa, from Belgian insurer Ageas SA for RM4.83 billion. (The Edge)

Hektar REIT has appointed Datuk Seri Jamil Bidin, 69, as chairman, effective immediately, filling the position that has been vacant since 2023 following Hasli Hashim’s resignation. (The Edge)

More boardroom changes were seen at companies linked to Zetrix AI Bhd founder Wong Thean Soon, better known as TS Wong. At Cuscapi Bhd, newly appointed independent director Datuk Faizal Abdullah was redesignated as chairman, days after being appointed chairman of Sersol Bhd on Sept 3. (The Edge)

Over at HeiTech Padu Bhd, former NexG Bhd director Badrul Hisham Abdul Aziz, who also chairs Kanger International Bhd, joined the board as a non-independent non-executive director. (The Edge)

Meanwhile, Wong trimmed his stake in Excel Force MSC Bhd after disposing of 104.21 million shares on Aug 28 and Sept 1, reducing his direct stake to 7.234%, or 44.12 million shares. (The Edge)

Information communication and technology service provider Theta Edge Bhd has secured a five-year contract from Prasarana Malaysia Bhd to develop, operate and maintain telecommunications infrastructure along the LRT3 corridor. (The Edge)

Crane manufacturer Favelle Favco Bhd  has secured four contracts worth RM131.7 million to supply cranes. (The Edge)

TRC Synergy Bhd has secured a RM149.98 million subcontract from Gamuda Bhd’s engineering arm for underground services works at a hyperscale data centre. (The Edge)

QES Group Bhd said its 70%-owned subsidiary QES (Singapore) Pte Ltd has agreed to acquire two freehold office units in Singapore for S$5.47 million (RM17.48 million) cash. (The Edge)

Malaysian Market Review. The FBM KLCI rose 6.69 points, or 0.39%, to 1,714.79, compared with Friday's close of 1,708.10. The broader market, however, was negative, with losers outpacing gainers 611 to 488. The KLCI’s resilience despite higher US Treasury yields points to a degree of insulation from global rate volatility, although weak market breadth suggests investors remain selective rather than broadly risk-on. Healthcare (+0.70%) and Plantation (+0.54%) led the gainers while Transportation & Logistic (-0.68%) and Telecommunications & Media (-0.63%) topped the laggards. 

Global Markets: There was no trading activity on Wall Street on Monday, as US markets were closed for the Labour Day holiday. Meanwhile, Europe's STOXX 600 edged up 0.02 points to 649.90, supported by firm eurozone business activity data. Asian markets traded mixed on Monday, with South Korea's KOSPI surging 4.61% on continued strength in chipmakers and renewed artificial intelligence optimism, and Japan's Nikkei 225 advancing 2.12%, while Hong Kong's Hang Seng bucked the trend to fall 0.93% (CNBC).

Market Outlook. Middle East tensions have escalated sharply, with the U.S. striking three Iranian oil tankers and Iran reportedly targeting U.S. warships, sending Brent crude up 1.03% to $97.31 and WTI up 1.26% to $92.63. We turn more cautious on global risk appetite, as this sharp escalation threatens to reignite inflationary pressures just as markets had priced in a more dovish Fed path, with the risk of further military confrontation likely to keep volatility elevated in the near term. The FBM KLCI is expected to remain range-bound in the short term as investors balance supportive domestic factors against lingering external uncertainties, with attention on developments in West Asia, global bond yield movements, and upcoming US inflation data for further clues on Fed policy direction. We remain cautious despite Monday's positive close, given elevated crude oil prices and rising US Treasury yields, which could keep inflationary pressures elevated and weigh on risk appetite.

Sector focus. Banking counters may extend their gains, supported by renewed buying interest and resilient earnings. Energy counters could also stay in focus given elevated crude oil prices, while REIT and Property may remain under pressure amid rising US Treasury yields and lingering uncertainty over the Fed's policy direction.

Technical Commentary: The FBM KLCI was up 6.69 points to close at 1,714.79, staging a modest bounce off Friday's low but remaining below both its EMA9 and EMA20. The index is still moving within the downward trend channel that has limited gains since February. A more convincing move back above the EMA9 and EMA20, followed by a clearance of the 1,720–1,725 zone, would be needed before the recovery can be viewed as more than a technical bounce. On the downside, 1,700 remains the immediate support, with a break below this level reopening the path towards 1,685. The key level to watch is 1,750–1,755. A break above this level could signal that the overall trend is starting to turn upward.

Company News 

Zetrix AI Bhd  is reviving its plan to acquire a 50% stake in Philippines-based information technology services provider MYEG Ventures Inc for RM130 million, after scrapping the deal last week. (The Edge)

Meanwhile, forced selling of shares held by Wong Thean Soon, co-founder and single-largest shareholder of Zetrix AI, continued, with Wong offloading more than 12% of his stake in the digital services company in just over a week. (The Edge)

MN Holdings Bhd said its wholly owned subsidiary MN Utilities Engineering Sdn Bhd and Pembinaan Tajri Sdn Bhd have jointly secured a RM67.32 million contract from Tenaga Nasional Bhd to install a 275kV underground cable for bulk power supply to Intel Penang. (The Edge)

NexG Bina Bhd has mutually terminated a heads of agreement to sell a 49% stake in its wholly owned lingerie units Classita (M) Sdn Bhd and Marywah Industries Sdn Bhd to their director Choo Peng Hung, citing a lack of material progress since the deal was signed in September last year. (The Edge)

Gas Malaysia Bhd is working with PETRONAS Gas Bhd on a feasibility study for a pipeline connecting the proposed Yan LNG regasification terminal to the Peninsular Gas Utilisation (PGU) system. (The Edge)

Cengild Medical Bhd plans to place up to 16.66 million new shares, or 2% of its issued share capital, to contractual specialist medical practitioners to attract and retain experienced doctors who are not eligible for its existing share option scheme. (The Edge)

Independent advisers have given contrasting recommendations on Batu Kawan Bhd’s takeover offers for MKH Bhd and MKH Oil Palm Bhd. (The Edge)

CBH Engineering Holding Bhd has secured its second data centre-related contract in a fortnight, an RM88.05 million job to design and build a 275kV consumer landing station for a data centre in Selangor, with the project due for completion by May 2027. (The Edge)

Hengyuan Refining Company Bhd has agreed on key terms to renew its product supply agreement with Shell Malaysia for up to 10 years from 2027 to 2036. (The Edge)

Construction outfit Vestland Bhd has secured a RM263.73 million flood mitigation contract in Kelantan, bringing its contract wins for the year to RM1.1 billion. (The Edge)

Pekat Group Bhd has secured three subcontracts worth RM57.18 million for earthing and lightning protection works for a project in Johor Bahru. (The Edge)

Malaysian Market Review. The FBM KLCI fell 0.41% to close lower at 1,708.10, weighed down by the plantation sector as investors locked in gains following its recent strong performance. The pullback largely reflects profit-taking and valuation consolidation rather than a deterioration in the crude palm oil outlook. Market breadth turned negative, with decliners leading advancers 568 to 523. Telecommunications & Media (+1.31%) and Utilities (+0.45%) were the only gainers while Plantation (-1.64%) and Healthcare (-0.99%) led the laggards.

Global Markets: The Dow fell 271.86 points, or 0.51%, to 53,414.25 on Friday, while the S&P 500 slid 0.38% to 7,718.60 and the Nasdaq dropped 0.29% to 26,506.99, after August payrolls came in far stronger than expected at 162,000 versus the 53,000 forecast, pushing Treasury yields higher and raising September rate-hike odds to 58% from 49.4% a day earlier. European markets followed through with gains, as the STOXX Europe 600 rose 0.12% to 649.88, supported by firm eurozone business activity data. Asian markets traded mostly higher on Friday, with South Korea's KOSPI up 1.64%, Hong Kong's Hang Seng gaining 1.74%, and Japan's Nikkei 225 advancing 1.26%, as easing Fed rate expectations lent additional support to sentiment. (CNBC). 

Market Outlook. The stronger-than-expected jobs report has modestly raised September rate-hike odds, with the Fed's next move now hinging heavily on incoming inflation data, especially after Chair Warsh's hawkish tone at Jackson Hole. We stay cautious on near-term direction, as resilient labor data against a hawkish Fed keeps rate expectations sensitive heading into the September FOMC meeting. The local bourse is likely to remain cautious in the near term, as persistent geopolitical uncertainties and elevated commodity prices keep investors selective, while resilient economic fundamentals and selective bargain-hunting should help cushion the downside. We stay neutral to cautious on the KLCI, as the recent plantation pullback appears more technical than fundamental, but persistent foreign selling could continue to limit the pace of any recovery in the broader market.

Sector focus. Plantation counters may see renewed interest as the recent pullback appears to be profit-taking rather than a fundamental shift, with CPO prices remaining firm and supportive of earnings. Export-oriented sectors such as Technology could also benefit from a weaker ringgit, as the stronger US jobs data and rising rate-hike odds lend support to the US dollar. Conversely, rate-sensitive sectors such as REIT may stay under pressure.

Technical Commentary: The FBM KLCI slipped 7.03 points to close at 1,708.10, giving back most of the past week's rebound as the index fell back below both its EMA9 and EMA20. The index rose for two days but failed to sustain its gains, suggesting that the recent rebound from 1,700 is starting to weaken. The index is now close to the important EMA120. The broader chart remains in a clear downtrend, with rallies consistently capped by the downward channel. The latest reversal suggests that the rebound is losing momentum and that further gains may face selling pressure. A decisive break below 1,700 would open the door to a retest of 1,685, and possibly the wider 1,680 support, while the 1,720–1,730 zone now stands as the immediate hurdle before the more significant 1,750–1,760 resistance comes back into play.

Company News 

Zetrix AI Bhd has terminated its proposed RM130 million share‑and‑cash deal to acquire a 50% stake in Philippines-based MyEG Ventures Inc announced three days ago. (The Edge)

In a separate announcement, Zetrix said it has disposed of its entire 16.9% stake in HeiTech Padu Bhd, comprising 27.5 million shares, via a direct business transaction dated Sept 2. (The Edge)

BCM Alliance Bhd has proposed a 10‑to‑1 share consolidation, reducing issued shares from 2.03 billion to about 203.41 million, alongside plans to issue up to 30% new shares. (The Edge)

Sarawak Consolidated Industries Bhd plans to buy three leasehold land parcels in Kolombong, Kota Kinabalu for RM15.2 million cash to expand its presence in Sabah. (The Edge)

Key Asic Bhd has signed a 10‑year memorandum of understanding with CT Vision (International) Holdings Ltd to build a large‑scale green AI data centre in Malaysia. (The Edge)

HHRG Bhd has appointed tycoon Tan Sri Syed Azman Syed Ibrahim as executive chairman of the biomass firm, effective immediately. (The Edge)

Shin Yang Group Bhd will acquire an 8.316-hectare industrial site in Kuching for RM34 million via a related-party deal. (The Edge)

Khee San Bhd and subsidiary Khee San Food Industries Sdn Bhd (KFI), along with several current and former directors, are being sued by Tunai Impian Enterprise Sdn Bhd for allegedly failing to honour a consent order tied to an RM18 million loan default. (The Edge)

Aumas Resources Bhd has reported a maiden mineral resource estimate of 110,000 ounces of contained gold for its Andrassy project in Tawau, Sabah. (The Edge)

• BNM maintained the OPR at 2.75% at its September MPC meeting, in line with our view.

• The policy tone remained positive, with 2027 growth driven by the external sector.

• BNM flagged the limited spillover of external sector strength to wages, underscoring its caution over modest domestic demand despite strong headline economic growth.

• We see the removal of the word “appropriate” from the MPS closing paragraph as a shift towards a mildly hawkish stance.

• We expect the OPR to stay on hold at 2.75% in 2026, followed by a 25-bp hike in 2027.

OPR kept at 2.75%  

Bank Negara Malaysia (BNM) maintained the Overnight Policy Rate (OPR) at 2.75% at its September Monetary Policy Committee (MPC) meeting, in line with our view and market expectations.

BNM’s tone turns mildly hawkish     

On the global front, BNM flagged that global inflation is expected to remain elevated due to the lagged pass-through of higher energy costs to consumers. Elevated inflationary pressures, coupled with uncertainties surrounding the Middle East conflict, will continue to weigh on global growth. Nonetheless, BNM noted that the sustained tech upcycle will provide broader support to the global economic outlook.

Domestically, BNM guided that the robust year-to-date growth momentum, driven by the external sector, should bring 2026 growth to “around 5%”. Notably, BNM expects growth to remain resilient in 2027, driven mainly by the external sector amid robust demand for E&E, tech-related non-E&E exports and sustained tourist spending. BNM also highlighted that higher tourism spending has helped offset lower tourist arrivals following the Middle East conflict, providing further support to the external sector.

On inflation, BNM highlighted that despite elevated business costs, the pass-through to consumer prices has remained contained by policy measures and “limited spillover of external sector strength to wages”. This underscores BNM’s caution over modest domestic demand and muted consumer inflation despite strong headline economic growth. The MPC emphasised that it will remain vigilant to cost pressures and domestic demand conditions.

Another important change in the September MPC statement is the closing paragraph. In the sentence “At the current OPR level, the MPC considers the monetary policy stance to be appropriate and consistent with the outlook…”, the word “appropriate” has been removed. We see this as a shift towards a mildly hawkish stance, giving BNM greater policy flexibility should domestic demand prove sufficiently resilient and external uncertainties ease.

OPR to stay pat in 2026; one 25-bp hike in 2027

We share BNM’s view that elevated business costs and lingering external uncertainties remain the key downside risks to the domestic economy this year. Thus, BNM is likely to adopt a wait-and-see approach and assess the headwinds in 2H26. Our 2026 baseline GDP growth forecast of +5.0% and inflation forecast of +2.0% remain within BNM’s current projections. We therefore expect BNM to keep the OPR on hold at 2.75% in 2026.

Meanwhile, judging by BNM’s mildly hawkish tone, we see scope for a 25-bp hike in 2027. We have also previously flagged the prospect of a rate hike following the stronger-than-expected 1H26 GDP performance (refer to our 2Q26 GDP report). To recap, BNM delivered a pre-emptive 25-bp cut in July 2025. Bloomberg’s implied OPR path from ringgit interest rate swaps reflects this view, pointing to one hike over the next year (Figure 2).

While Middle East tensions and US tariff policy remain fluid, the risks have eased considerably, with businesses proving more resilient than anticipated. We expect a 25-bp rate hike in 2Q27, effectively normalising the OPR to 3.00%, when there should be greater clarity and confidence on inflation stability, domestic demand resilience and geopolitical developments.

Malaysian Market Review. The FBM KLCI rose 0.37% to close at 1,715.13, as Bank Negara Malaysia's widely expected decision to hold the OPR steady at 2.75% for a seventh consecutive meeting removed a near-term overhang, with positive carry-over from Wall Street's overnight rally also supporting sentiment. Market breadth turned positive, with advancers leading decliners 625 to 497. Construction (+3.06%) and Healthcare (+1.08%) led sectoral gains while Telecommunications & Media (-1.10%) and REIT (-0.90%) lagged.

Global Markets: Wall Street surged on Thursday, with the Dow up 1.18% to 53,686.11, the S&P 500 gaining 1.06% to 7,747.71, and the Nasdaq rising 1.40% to 26,584.06, their best session since early August. Fed Governor Christopher Waller's dovish signal that he could support keeping rates steady in September reduced the odds of a rate hike to 50%, from 63%, while Nvidia's USD$12.9b Hugging Face acquisition lifted tech sentiment further. European markets followed through, with the STOXX Europe 600 up 0.49% to 649.10 on firm eurozone business activity data. Asian markets were mixed on Thursday, with the Shanghai Composite little changed at +0.02%, the Hang Seng down 0.39%, and the Nikkei 225 off 0.17%, even as easing Fed rate expectations offered some support. (CNBC). 

Market Outlook. Risk appetite improved sharply on Thursday as Fed Governor Waller's dovish tilt and Nvidia's Hugging Face acquisition drove Wall Street to its best session in a month, even as Iran's retaliatory strikes on US allies in Jordan, UAE and Kuwait kept oil above $95 a barrel. Investors will now turn to Friday's US non-farm payrolls, the week's key data point, for further clarity on the Fed's September decision. Barring a fresh flare-up in the Middle East, we expect the FBM KLCI to extend its rebound into Friday, with the improved global risk tone and this week's steady OPR decision providing a supportive backdrop even as earnings season continues to drive individual stock performance.

Sector focus. Technology bears watching into Friday after Nvidia's $12.9 billion Hugging Face deal lifted global chip sentiment. Energy remains in focus with Brent still above $95 a barrel on the Gulf escalation. Construction bears watching for further follow-through as AI and data centre investments continue to drive demand for infrastructure and related construction works. Meanwhile, we believe the recent sell-off in banking stocks may have been overdone and warrants closer monitoring.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI extended its rebound for a second straight session to close at 1,715.13 on Thursday, though it again fell short of the 1,720-1,730 resistance zone flagged in our previous note, with yesterday’s high of 1,716.23 still well below that ceiling, keeping the broader downward channel intact. A decisive break above 1,720-1,730 would be needed to challenge the more significant 1,750-1,760 resistance, while a slide back below 1,700 would reopen the path towards 1,685. The two-day bounce looks to be gaining some traction, though we still view it as a relief rally until 1,720-1,730 is convincingly cleared.

Company News 

Zetrix AI Bhd has not set the issue price for new shares that will make up most of the RM130 million payment for its planned purchase of a 50% stake in MyEG Ventures Inc, citing recent volatility in its share price. (The Edge)

Farm Fresh Bhd plans to raise up to RM200 million via private placement to fund capital expenditure and meet a shareholder buyout obligation at its ice‑cream unit Inside Scoop. (The Edge)

Techna‑X Bhd is disposing of its 50% stake in Hong Kong‑based HK Aerospace Beidou New Energy Technology Co Ltd (HKAB), a loss‑making super battery and capacitor maker, for RM45 million cash to support its restaurant expansion funding. (The Edge)

Alam Maritim Resources Bhd has appointed Datuk Aloysius Albert Michael as senior strategic adviser effective Sept 3. (The Edge)

PRG Holdings Bhd has been placed under interim judicial management by the Kuala Lumpur High Court following a boardroom dispute and debt conflict with its largest shareholder, Datuk Ng Yan Cheng (The Edge)

Niche Capital Emas Holdings Bhd said its joint partner Greensnow Consolidated Bhd (GCB) has secured an interim manufacturing licence from the Ministry of Investment, Trade and Industry (Miti). (The Edge)

Sersol Bhd has named Datuk Faizal Abdullah as independent and non‑executive chairman, part of a board refresh following several director exits. (The Edge)

Salutica Bhd announced the resignation of its principal officers as the Lim family exited the board and ceased to be substantial shareholders on Sept 3. (The Edge)

Media Chinese International Ltd plans to sell its Canadian property for C$6.85 million (RM19.88 million) after ending media operations there. (The Edge)

Globetronic Technology Bhd said its non‑executive chairman Ta Shun Dher has become a substantial shareholder after acquiring 8.91 million shares, equal to a 1.14% stake, on Sept 1. (The Edge)

Orgabio Holdings Bhd plans to buy a freehold industrial property in Semenyih, Selangor for RM11.26 million cash. (The Edge)

Magni‑Tech Industries Bhd reported a 17% drop in 1QFY2027 net profit to RM29.4 million from RM35.6 million a year earlier, mainly due to weaker garment contributions. Revenue fell 15.6% year‑on‑year to RM318.6 million from RM377.6 million. (The Edge)

• US Treasury yields near multi-year highs as fiscal concerns, persistent inflation, geopolitical risks, AI-related corporate borrowing and a more hawkish Fed outlook drive the bond sell-off.

• Equity valuations remain under pressure, particularly Technology, growth, REITs and high-dividend stocks, but we view the weakness as a correction rather than the start of a structural bear market.

• Malaysia’s fundamentals remain resilient, supported by 6.0% 2Q26 GDP growth and 38.0% July export growth. We expect domestic earnings to remain relatively intact despite global volatility.

• Watch key technical supports for stabilisation and buy the dip selectively. We maintain our Barbell Strategy, favouring Technology, Construction, Utilities and selected small caps with strong earnings visibility and structural growth.

• Maintain our year-end KLCI target of 1,770. 

Quick Take

US Treasury yields have risen sharply, with the 10-year yield climbing to around 4.8% and the 30-year yield approaching its highest level in nearly two decades. The sell-off has been driven by persistent inflation concerns, elevated US fiscal deficits and Treasury issuance, renewed geopolitical tensions and higher oil prices, as well as growing corporate borrowing to fund AI and data-centre investments.

Market expectations for US monetary policy have also shifted following Fed Chairman Kevin Warsh’s Jackson Hole speech, which was viewed as more hawkish and resulted in higher expectations for a September rate hike. Meanwhile, stronger-than-expected economic activity and still-elevated inflation have added to upward pressure on Treasury yields.

The rise in Treasury yields has weighed on global equities, particularly technology and growth stocks, while higher oil prices have added to inflation concerns. In Malaysia, the FBM KLCI fell 25.34 points, or 1.47%, to 1,700.54 on 1 September amid broad-based selling. As highlighted on Page 4 of our previous Market Outlook, we had anticipated a potential near-term weakness in the local market, with the subsequent pullback broadly unfolding as expected.

Our View

The recent rise in Treasury yields is a genuine concern, but we believe the market is becoming overly focused on the possibility of a US bond crisis. 

Several forces are driving the sell-off. The first is a shift in expectations for Fed policy. Chairman Kevin Warsh has adopted a less predictable communication style and recently delivered a more hawkish message on inflation, prompting markets to reassess the path of US interest rates. The second is growing concern over US fiscal sustainability as persistent deficits require substantial Treasury issuance. The third is the AI investment boom, which is driving substantial corporate debt issuance to finance data centres and related infrastructure, creating additional competition for investor capital. Finally, geopolitical tensions and higher oil prices are increasing concerns over inflation. Together, these factors are pushing up the term premium and long-term Treasury yields.

However, we believe investors should distinguish between higher yields and a breakdown in the Treasury market. The US authorities still have significant room to respond. The Treasury can adjust the maturity and composition of its debt issuance and conduct buybacks to manage the longer-end yields. The US Treasury has already announced that the maximum size of selected long-end liquidity-support buybacks will increase from US$2bn to at least US$4bn per operation effective 9 September. Meanwhile, the Federal Reserve can adjust interest rates and, in an extreme scenario, resume Treasury purchases through QE.

We therefore believe the probability of a temporary bond-driven correction is materially higher than that of a systemic Treasury crisis.

Market Implications

Higher Treasury yields raise the risk-free rate used to value equities, resulting in downward pressure on valuation multiples. The impact is greatest on companies whose valuations depend heavily on earnings further into the future.

This makes Technology and growth stocks particularly vulnerable. REITs and high-dividend stocks also face pressure as higher Treasury yields reduce the relative attractiveness of equity income.

However, valuation is only one transmission mechanism. Higher Treasury yields also raise corporate borrowing costs, particularly for highly leveraged companies and businesses undertaking large capital expenditure programmes. At the same time, stronger US yields can support the US dollar, tighten global liquidity and weigh on emerging-market fund flows.

We therefore expect the market to increasingly differentiate between companies with strong earnings & balance sheets and those whose valuations depend primarily on multiple expansion. 

Malaysia – Fundamentals Remain Intact

We believe Malaysia is relatively well positioned to absorb the current global bond-market volatility. The domestic economy expanded by +6.0% YoY in 2Q26, while July exports surged +38.0%, highlighting continued strength in domestic activity, particularly the E&E sector and AI-related investment. Furthermore, benign inflation at a projected +2.0% in 2026 and a broadly stable OPR outlook should provide an important cushion against global volatility.

Resilient economic fundamentals should continue to provide support for company earnings. If Malaysian equities weaken because of higher US yields, the initial impact should primarily be through valuation and foreign flows rather than a deterioration in domestic earnings.

This creates an opportunity. We would use broad-based market weakness to accumulate fundamentally sound companies where the earnings outlook remains intact.

Technical Analysis - Watch for Stabilisation, Then Buy the Dip

For the FBM KLCI, the recent sell-off has brought the index back towards the 1,700 psychological level after breaking below the previous 1,720 support. We view 1,700 as the immediate key support, with a sustained break below this level likely to open the way towards the next support zone (1,685). On the upside, the 1,720–1,730 zone has now become the first resistance, followed by the 1,750–1,760 resistance zone. Given the sharp decline in recent sessions, we would watch price action closely for signs of stabilisation before increasing exposure.

Strategy

The recent decline in Malaysian equities demonstrates how quickly global bond-market weakness can spill over into domestic markets. The FBM KLCI fell 1.47% to 1,700.54 on 1 September, bringing the index back towards the key support level.

We believe investors should resist the temptation to reduce equity exposure indiscriminately. We maintain our Barbell Strategy, combining defensive, cash-generative companies with selected structural-growth and alpha opportunities, and advocate using market weakness to accumulate fundamentally strong names at more attractive valuations.

The key is to distinguish between valuation risk and fundamental risk. A company whose share price falls because its valuation multiple contracts can become more attractive if earnings remain intact. Conversely, companies with weak cash flow, high leverage or limited earnings visibility may remain unattractive despite a correction.

Therefore, we advocate buying the right dip, rather than simply buying every dip.

Sector Strategy

We remain constructive on Technology, despite its sensitivity to higher bond yields. The structural AI and semiconductor investment cycle remains intact, and we view valuation-driven weakness as an opportunity to accumulate companies with strong earnings growth and structural exposure. Our Tech Top Picks are VITROX (BUY, TP: RM11.12), QES (BUY, TP: RM0.75), EG (BUY, TP: RM2.93) and FRONTKN (BUY, TP: RM5.86).

We remain positive on Construction, underpinned by Malaysia’s ongoing infrastructure, data-centre and power investment cycle. We favour companies with strong order books and good earnings visibility. Our Construction Top Picks are ISF (BUY, TP: RM0.92) and HSS (BUY, TP: RM0.70).

Utilities offer a combination of defensive characteristics and structural growth, particularly from rising electricity demand driven by data centres. However, we remain selective given the sector’s sensitivity to higher bond yields. Our preferred pick is TENAGA (BUY, TP: RM16.37).

We view Banks as a core portfolio exposure, supported by resilient domestic growth and stable credit conditions. However, we expect some downside risk in local banks as fund managers begin to reposition ahead of the FBM KLCI 50 transition, which will structurally dilute the weighting of financial stocks. Against this backdrop, we see greater alpha potential in selected Technology, Construction and small-cap names, where earnings growth and structural themes remain more compelling.

Conclusion

We expect US Treasury yields to remain elevated in the near term as markets digest fiscal concerns, inflation risks, geopolitical developments, AI-related borrowing and the Fed's policy direction. This will keep global equity markets volatile, particularly in September as investors await the Fed's policy decision.

However, we do not believe the current environment represents the beginning of a structural equity bear market. Malaysia's strong domestic fundamentals provide a cushion, while the US authorities retain significant tools to prevent Treasury-market stress from becoming systemic. Our year-end FBM KLCI target remains at 1,770.

We therefore maintain our Barbell strategy and advocate buying the dip strategy, with preference for technology, construction, utilities and selected small caps where structural growth and earnings visibility can offset higher discount rates. 

Malaysian Market Review. The FBM KLCI rose 0.48% to close at 1,708.74, as bargain hunting emerged in banking and commodity-linked heavyweights following Tuesday's sell-off, with crude oil's climb above $92 a barrel on renewed US strikes on Iran lending additional support to energy and plantation counters. Market breadth stayed negative despite the index's gain, with decliners outnumbering advancers 746 to 424, underscoring the narrow, heavyweight-led nature of the rebound. Plantation (+2.28%) and Energy (+1.53%) led sectoral gains while Technology (-2.03%) and Telecommunications & Media (-1.00%) lagged.

Global Markets: Wall Street staged a rebound on Wednesday, snapping back from two losing sessions as oil cooled and NY Fed's Williams struck a dovish tone on rates, even as Trump claimed "almost total control" of the Strait of Hormuz and warned of a larger strike "waiting in the wings." The Dow rose 0.56% to 53,061.95, the S&P 500 gained 0.46% to 7,666.60, and the Nasdaq added 0.45% to 26,217.83. Europe extended its losing streak to a third session, with the STOXX Europe 600 down -0.24% to 645.91 on lingering oil and yield pressure. Asian markets sold off earlier on Wednesday on carry-over from Tuesday's Wall Street rout, with the Kospi tumbling -3.99%, the Nikkei 225 off -2.85%, the Shanghai Composite down -0.97%, and the Hang Seng little changed at -0.07%. (CNBC).

Market Outlook. Sentiment turned more constructive by Wednesday's close as oil's spike cooled and soft US private payrolls data reinforced bets that the Federal Reserve can hold rates, helping Wall Street snap a two-day losing streak even after a sharp selloff across Asian markets earlier in the day. Investors will now focus on Bank Negara Malaysia's interest rate decision on Thursday, where consensus expects the OPR to be held steady at 2.75%, alongside US ISM Services PMI and non-farm payrolls due Friday for further signals on the Fed's policy path. Barring a fresh escalation in the Middle East, we expect the FBM KLCI to extend its rebound cautiously on Thursday, with the improved global risk tone providing some support even as earnings season continues to drive individual stock performance.

Sector focus. Energy remains one to watch as Brent crude still trades close to $95 a barrel on lingering Strait of Hormuz risk. Plantation should also stay in focus given its correlation with elevated crude levels, which typically lift biodiesel-linked demand for palm oil. Banking counters bear watching into Thursday's Bank Negara rate decision, where a widely expected hold at 2.75% should limit near-term volatility.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI's dip to an intraday low of 1,695.89 yesterday briefly breached the 1,700 level flagged in our previous note, but the index staged a rebound to close 0.48% higher at 1,708.74. The bounce, however, stayed well short of the 1,720-1,730 resistance zone we had flagged as the ceiling for any recovery attempt, keeping the broader downward channel intact. A more decisive move above 1,720-1,730 would be needed to threaten the key 1,750-1,760 resistance, while a renewed slide back below 1,700 would reopen the path towards 1,685. For now, we view today's bounce as a technical relief rally within the prevailing downtrend rather than a confirmed reversal.

Company News 

AirAsia Group Bhd has confirmed plans to raise up to US$1 billion (RM4.05 billion) from the international debt market and RM700 million in local credit facilities for the primary use of refinancing existing borrowings and strengthening its balance sheet. (The Edge)

Sersol Bhd announced that Peh Lon Pah @ Pei Tze Chiang has emerged as a substantial shareholder after acquiring 100 million shares, representing a 12.429% direct stake, via an off-market transaction on Sept 1. (The Edge)

MyMBN Bhd reported that non-independent and non-executive chairman Liw Chong Liong is no longer a substantial shareholder after selling his entire stake. (The Edge)

The Employees Provident Fund (EPF) has become the third-largest shareholder in Eco-Shop Marketing Bhd after buying 8.68 million shares, raising its holding to 5.14%, or 296.16 million shares. (The Edge)

Mulpha International Bhd has invested US$7 million (RM28.28 million) in the SHK Latitude Alpha Fund, a multi-manager hedge fund portfolio, to improve risk-adjusted returns. (The Edge)

Central Global Bhd plans to raise up to RM83.31 million via private placement to fund construction projects in Sabah (The Edge)

KJTS Group Bhd said its Thai unit, KJTN Engineering Co Ltd, has secured four 20‑year service agreements with subsidiaries of Central Plaza Hotel PCL (Centel). (The Edge)

A unit trust fund managed by Kenanga Investors Bhd has become a substantial shareholder in Sern Kou Resources Bhd. (The Edge)

Malaysian Market Review. The FBM KLCI slumped 1.47% to close at 1,700.54, as fresh US-Iran strikes near the Strait of Hormuz pushed Brent crude above $91 a barrel and hawkish Jackson Hole remarks from Fed Chair Kevin Warsh stoked inflation concerns, triggering broad-based risk-off selling. Market breadth was firmly negative, with decliners overwhelming advancers 956 to 349. Energy (+1.47%) and Transportation (+0.34%) were the standout gainers while Industrial Products (-2.47%) and Technology (-2.18%) led sectoral declines.

Global Markets: US equities extended their retreat on Tuesday as fresh Iranian strikes on two tankers, a Saudi vessel and a South Korean-owned one, reignited Strait of Hormuz tensions and sent Brent crude surging toward $92 a barrel, while the 10-year Treasury yield jumped to 4.79%, a 20-month high. The Dow Jones fell 0.79% to 52,766.88, the S&P 500 lost 0.71% to 7,631.47, and the Nasdaq Composite dropped 1.03% to 26,099.77 as technology led the selling for a second straight session. European markets followed suit, with the STOXX Europe 600 down 0.56% to 651.1. Asian markets closed mixed on Tuesday, with the Hang Seng down 0.93% to 25,328.73 and the Nikkei 225 off 0.15% to 66,215.34 tracking the region's risk-off tone, the Shanghai Composite easing 0.16%, and the Kospi bucking the trend to close 0.23% higher. (CNBC).

Market Outlook. Regional sentiment turned more defensive on Tuesday after fresh US-Iran strikes on tankers near the Strait of Hormuz sent oil surging and pushed the 10-year US Treasury yield to a 20-month high, a combination that also weighed on Wall Street for a second straight session. Investors will also focus on a heavy data week, headlined by the Bank of Canada and Reserve Bank of New Zealand rate decisions on Wednesday and US non-farm payrolls on Friday. Barring further escalation in the Middle East, we expect the FBM KLCI to open cautiously on Wednesday, with earnings season continuing to drive individual stock performance alongside the broader macro crosscurrents. As highlighted on Page 4 of our previous Market Outlook, we had anticipated further weakness in the local market, and the subsequent pullback has played out largely as expected.

Sector focus. We expect Energy in focus this week as the Strait of Hormuz escalation keeps Brent near $92 a barrel, a dynamic that lifted the sector 1.47% on Tuesday even as the broader market sold off. Meanwhile, we expect further downside in the KL Finance Index as fund managers may begin positioning ahead of the FBM KLCI 50 transition, which will structurally dilute the weighting of financial stocks.

FBMKLCI Technical Outlook

Technical Commentary: Since retreating from the key 1,750–1,760 resistance zone, the FBM KLCI has tumbled by c.50 points over the past three trading days. The index could break below the 1,700 level today, which would reinforce the prevailing downward trend. Overall, the index remains within a downward channel, with further downside potentially towards 1,685. Any rebound, in our view, is likely to be short-lived, with immediate resistance at the 1,720–1,730 zone.

Company News 

IHH Healthcare Bhd said India’s Delhi High Court has ordered a forensic audit into how the former Fortis Healthcare Ltd promoters, brothers Malvinder Mohan Singh and Shivinder Mohan Singh, lost their shareholding. (The Edge)

Ta Win Holdings Bhd said its subsidiary Ta Win Industries (M) Sdn Bhd is slashing 39 jobs or 52% of its workforce. (The Edge)

Chin Hin Group Property Bhd has marked the structural topping out of Ayanna Resort Residences in Bukit Jalil, which is on track for unit handover in the second quarter of 2027 after achieving a 95% take-up rate (The Edge)

Seni Jaya Corp Bhd has secured a seven-year concession to manage and commercialise advertising spaces at the Johor Bahru-Singapore Rapid Transit System (RTS Link). (The Edge)

VSTECS Bhd is cashing out of its seven-year investment in software company ISATEC Sdn Bhd for RM48.75 million as it plans to redirect capital towards larger projects in areas including artificial intelligence (AI) and data-centre infrastructure. (The Edge)

Bintai Kinden Corp Bhd will receive RM24.7 million under a proposed settlement with Universiti Islam Melaka Bhd (UIMB) over its long-standing concession to provide student accommodation at Universiti Islam Melaka (UNIMEL). (The Edge)

Kee Ming Group Bhd has secured two subcontracts worth a combined RM40 million to provide mechanical and electrical engineering services for warehouses in Penang and Selangor. (The Edge)

MHC Plantations Bhd has declared a special dividend of 10 sen per share for the financial year ending Dec 31, 2026 (FY2026). (The Edge)

Malaysian Market Review. The FBM KLCI fell 0.91% to close at 1,725.88 on Friday, as broad-based selling ahead of the Merdeka Day long weekend weighed on sentiment across the board. Market breadth was decisively negative, with 917 losers against 405 advancers, while 260 counters were unchanged. Sector losses were led by Technology (-3.65%) and Utilities (-2.41%), while Industrial Products (-0.06%) and Plantation (-0.36%) posted the smallest declines as all thirteen sector indices closed lower.

Global Markets: US equities fell for a second straight session on Monday, with the Dow Jones down 0.70% to 53,186, the S&P 500 off 0.33% to 7,686 and the Nasdaq Composite down 0.12% to 26,370, as fresh US strikes on Iranian rocket launchers near the Strait of Hormuz and Tehran's retaliation sent oil surging and revived inflation concerns following Fed Chair Kevin Warsh's hawkish Jackson Hole remarks on Friday, in which he called 3.7% inflation "concerning" and said he'd be "hard-pressed" to call conditions restrictive. Trump's weekend announcement of a deal granting the US control of 65 billion barrels of Venezuelan oil reserves, aimed at eventually lowering gas prices, was overshadowed by the Iran-driven spike and showed no discernible market impact. European markets eased on the same oil and yield pressures, with the STOXX Europe 600 down 0.62% to 651.10. Asian markets were mixed: Japan's Nikkei 225 slipped 0.14% to 66,311.93 and Hong Kong's Hang Seng eased 0.07% to 25,566.99, while South Korea's Kospi rose 0.46% to 6,820.02 and China's Shanghai Composite gained 0.86% to 3,986.30 despite factory activity staying contractionary for a second month (CNBC).

Market Outlook. Regional sentiment turned defensive over the long weekend after fresh US-Iran strikes near the Strait of Hormuz sent oil surging, while Fed Chair Kevin Warsh's hawkish Jackson Hole remarks lifted September rate-hike bets. Investors will also focus on a heavy data week, headlined by US non-farm payrolls on Friday. Barring further escalation in the Middle East, Overall, we expect the FBM KLCI to open cautiously on Tuesday, with earnings season continuing to drive individual stock performance alongside broader macro crosscurrents.

Sector focus. We expect the Technology sector should remain in focus following Nvidia's blowout earnings and bullish AI demand outlook, Energy counters bear watching too, as crude surged over the weekend on renewed US-Iran strikes near the Strait of Hormuz. Meanwhile, the Plantation stocks may also attract interest amid firmer CPO prices, with futures closing broadly higher on Friday. 

Technical Commentary: The FBM KLCI remains below the key 1,750–1,760 resistance zone after retreating from its intraday high. The index has also slipped below its 9- and 20-day moving averages for the first time during the recent recovery, signalling a loss of near-term momentum. A decisive break below 1,720 would reinforce the bearish bias and pave the way towards the 1,700 level. On the upside, 1,755 remains the immediate resistance, followed by the 1,770–1,775 region should stronger buying momentum emerge.

Company News 

Yinson Holdings Bhd's major shareholder, Yinson Legacy Sdn Bhd, confirmed that it is in preliminary talks with MISC Bhd over a potential privatisation of the oil and gas firm. (The Edge)

Gamuda Bhd has secured contracts worth a combined RM3.57 billion to build two hyperscale data centres in Port Dickson, Negeri Sembilan. (The Edge)

WCT Holdings Bhd has secured a RM600.9 million contract to build a 41-storey office tower at the Tun Razak Exchange. (The Edge)

Zetrix AI Bhd has clarified that it has no links with former human resources minister Datuk Seri M Saravanan, who has been charged with corruption in relation to the approval of foreign worker quotas for a local company in 2022. (The Edge)

HeiTech Padu Bhd, whose share price tumbled to a 30-month low on Friday, said it is unaware of any reason behind the sharp decline after the stock exchange regulator issued an UMA query. (The Edge)

CIMB Group Holdings Bhd’s net profit for 2QFY2026 edged up 1.2% to RM1.94 billion from RM1.89 billion a year earlier, supported by broad-based performance across all businesses.. (The Edge)

Capital A Bhd posted its second consecutive quarterly profit following the disposal of its aviation business, with stronger aircraft maintenance and logistics operations offsetting softer travel demand. (The Edge)

RHB Bank Bhd’s net profit for 2QFY2026 edged up to RM807.15 million compared to RM803.50 million a year earlier, as higher net interest income and lower provisions offset a decline in non-interest income. (The Edge)

Axiata Group Bhd's net profit from continuing operations rose in 2QFY2026 from a year earlier mainly on the absence of goodwill impairment. (The Edge)

IOI Corporation Bhd's net profit for the fourth quarter ended June 30, 2026 (4QFY2026) rose 17% to RM501 million from RM437 million, driven by improved performance in the resource-based manufacturing segment (The Edge)

Hengyuan Refining Company Bhd resumed dividend payments after a four-year hiatus with a 10 sen interim dividend, following a 2QFY2026 net profit of RM600.54 million, its highest since 2022 and a fourth consecutive profitable quarter (The Edge)

Sarawak Oil Palms Bhd’s 2QFY2026 net profit jumped 67.2% to RM153.69 million from RM91.92 million a year earlier, thanks to higher sales volumes and realised prices of crude palm oil and palm kernel. (The Edge)

Hibiscus Petroleum Bhd's 4QFY2026 net profit more than doubled, rising 155.6% to RM190.72 million, driven by higher realised oil and gas prices under its PM3 CAA PSC and strong operating performance in Malaysia. (The Edge)

Berjaya Corp Bhd narrowed its 2QFY2026 net loss to RM109.02 million from RM207.2 million a year earlier, supported by stronger operating performance across its business segments and lower net investment-related expenses. (The Edge)

Eversendai Corp Bhd posted a net loss of RM10.63 million for the second quarter of 2026 and expects to settle claims over its cancelled structural steel contract for the Trojena Ski Village by 1Q or 2Q2027. (The Edge)

Farm Fresh Bhd’s net profit for the first quarter ended June 30, 2026 (1QFY2027) declined 18% to RM26.82 million from a year earlier, due to higher cost of fuel and plastic bottles. (The Edge)

Malaysian Market Review. The FBM KLCI fell (-0.39%) to 1,741.72 on Thursday as profit-taking in selected heavyweights weighed on the benchmark amid the ongoing corporate earnings season. However, market breadth remained slightly positive, with 612 advancers against 596 decliners, while 568 counters were unchanged. Sector-wise, Construction (+1.29%), Energy (+1.28%) and Technology (+1.20%) led the gains, while Transportation & Logistics (-0.90%), Plantation (-0.86%) and Consumer Products & Services (-0.63%) were the top laggards.

Global Markets: U.S. equities rebounded overnight, with the Dow Jones Industrial Average rising (+0.20%), the S&P 500 gaining (+0.72%) and the Nasdaq Composite surging (+1.57%), supported by strong gains in technology and semiconductor stocks following Nvidia's stronger-thanexpected earnings and upbeat revenue outlook. Nvidia jumped (+8.7%), while semiconductor names including Broadcom and Intel also rallied. In Europe, the STOXX Europe 600 ended lower, as gains in technology stocks following Nvidia's results were offset by weakness across consumer, chemical and auto stocks. Across Asia, markets ended mixed, with South Korea's Kospi rising (+1.53%), while Japan's Nikkei 225 fell (-0.20%) and Hong Kong's Hang Seng Index declined (- 0.34%) (CNBC).

Market Outlook. We expect the FBMKLCI to trade higher today, with pre-Merdeka buying interest potentially providing further support ahead of the National Day celebrations. Investors will continue to digest the latest corporate earnings and company developments, with individual stock performance likely to remain driven by the results. Globally, Nvidia's stronger-than-expected earnings and upbeat outlook could provide further support to technology and semiconductor sentiment, while attention will shift to Federal Reserve Chair Kevin Warsh's Jackson Hole speech later today for clues on the U.S. interest rate outlook. Overall, we expect the market to remain supported by improving technology sentiment and pre-Merdeka positioning, although investors are likely to remain selective amid ongoing earnings releases and external uncertainties.

Sector focus. We expect the Technology sector to remain in focus following Nvidia's strongerthan-expected earnings and upbeat outlook, which could further lift sentiment towards AI-related and semiconductor counters. Meanwhile, Plantation stocks may attract interest amid firmer crude palm oil prices.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI remains below the key 1,750–1,760 resistance zone after retreating from its intraday high, while still holding above its 9- and 20-day moving averages. A decisive breakout above 1,755 would strengthen the bullish momentum and pave the way towards the 1,770–1,775 area. On the downside, 1,720 is the immediate support, followed by 1,700 should further profit-taking emerge. Overall, the near-term bias remains positive, although the index needs to clear the 1,750–1,760 resistance zone to sustain its upward momentum.

Company News

Tenaga Nasional Bhd reported a 23% decline in 2QFY26 net profit due to forex losses despite stronger electricity sales, and declared a 25 sen interim dividend. (The Edge)

Inari Amertron Bhd posted its weakest quarterly results in 14 years, with 4QFY26 net profit plunging 88% due to the fire incident at its Philippine plant and lower revenue. (The Edge)

Sunway Bhd reported a 16.7% increase in 2QFY26 net profit, supported by stronger property and healthcare contributions, and declared a three sen interim dividend. (The Edge)

Berjaya Food Bhd narrowed its FY2026 net loss significantly, supported by improved Starbucks operations, cost optimisation and store rationalisation. (The Edge)

Time dotCom Bhd posted its strongest quarterly earnings in a decade, with 2QFY26 net profit rising 29% on higher data revenue and forex gains, and declared a 5.41 sen special dividend. (The Edge)

IOI Properties Group Bhd more than doubled its FY2026 dividend to 16 sen per share after fullyear net profit more than doubled and revenue hit a record RM4.44 billion. (The Edge)

Capital A Bhd posted its second consecutive quarterly profit following the disposal of its aviation business, with stronger aircraft maintenance and logistics operations offsetting softer travel demand. (The Edge)

IHH Healthcare Bhd reported a 29.3% increase in 2QFY26 net profit, supported by sustained demand, a more complex patient mix and price adjustments, and declared a 5.5 sen interim dividend. (The Edge)

Press Metal Aluminium Holdings Bhd posted record 2QFY26 earnings, with core Patami rising 42% on higher realised metal prices, and declared a 2.5 sen interim dividend. (The Edge)

Petron Malaysia Refining & Marketing Bhd remained loss-making in 2QFY26 as its Port Dickson refinery shutdown forced greater reliance on imports, marking its second consecutive quarterly loss. (The Edge)

Chin Hin Group Bhd reported a 63.9% decline in 2QFY26 net profit due to a fair value loss on other investments, despite stronger revenue from its property, construction and building materials businesses. (The Edge)

Malayan Flour Mills Bhd posted a 53% increase in 2QFY26 net profit, driven by better flour and grain trading margins and stronger joint venture contributions, and declared a two sen interim dividend. (The Edge)

Hong Leong Bank Bhd maintained its FY2027 loan growth target of 6%-7%, adopting a more cautious stance amid inflationary pressures and strong deposit competition. (The Edge)

Malaysian Market Review. The FBM KLCI rebounded on Wednesday, rising (+0.70%) to 1,748.54 and snapping a two-day losing streak as trading resumed after the public holiday. Market breadth turned positive, with 777 advancers against 466 decliners, while 582 counters were unchanged. Sector-wise, Utilities (+3.65%), Technology (+2.13%) and Construction (+1.22%) led the gains, while REIT (-1.18%), Plantation (-0.90%) and Telecommunications & Media (-0.52%) were the top laggards.

Global Markets: U.S. equities closed broadly lower overnight, with the Dow Jones Industrial Average declining (-0.21%), while the S&P 500 edged down (-0.02%) and the Nasdaq Composite fell (-0.08%), as investors remained cautious following the latest U.S. inflation data and upcoming Fed guidance at Jackson Hole. The July PCE data showed inflation remained elevated, with core PCE rising 3.3% year-on-year, while Treasury yields were little changed. In Europe, the STOXX Europe 600 was broadly flat, edging down (-0.01%), as weakness in oil and gas stocks was offset by gains in travel, banking and mining counters. Across Asia, markets ended mostly higher, with Japan's Nikkei 225 rising (+0.62%), South Korea's Kospi gaining (+0.97%), Hong Kong's Hang Seng Index advancing around (+0.56%) and China's Shanghai Composite increasing (+0.59%) (CNBC).

Market Outlook. We expect the FBMKLCI to extend its upward momentum, with the index potentially seeing some pre-Merdeka buying interest ahead of the upcoming National Day celebrations. The ongoing earnings season is likely to keep investors selective, with corporate results and the latest company developments continuing to drive individual stock performance. Globally, Nvidia's stronger-than-expected earnings and upbeat revenue outlook could help reinforce confidence in the AI investment theme and support sentiment towards technologyrelated counters. Meanwhile, investors will also closely watch the Jackson Hole symposium later this week for further clues on the Federal Reserve's interest rate outlook. Overall, we expect trading to remain selective, with stronger earnings results and improving sentiment potentially providing further support to individual counters and the broader market.

Sector focus. We expect the Technology sector to remain in focus following Nvidia's strongerthan-expected earnings and upbeat outlook, which could further support sentiment towards AIrelated and semiconductor counters. Domestically-driven and consumer-linked counters could see early support from pre-Merdeka positioning, as patriotic-themed buying and index-linked flows typically build ahead of the national holiday. Meanwhile, Plantation stocks may attract interest following the recent strength in crude palm oil prices.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI is now testing the key 1,750–1,760 resistance zone, while remaining above its 9- and 20-day moving averages, suggesting that the near-term momentum remains positive. A decisive breakout above 1,755 could reinforce the bullish momentum and pave the way for a stronger upside move. On the downside, 1,720 remains the key support, followed by 1,700 should profit-taking emerge. Overall, the near-term bias remains positive, although a break above the 1,750–1,760 resistance zone is needed to confirm a stronger recovery.

Company News

IJM Corp Bhd has redesignated Datuk Lee Teck Yuen as its non-executive chairman following the retirement of Tan Sri Krishnan Tan Boon Seng after 42 years with the group. (Business Today)

MCE Holdings Bhd has secured RM54.28m worth of 40-month supply contracts from Perodua to supply automotive electronics and mechatronic components for a new ICE vehicle model. Production is expected to commence in 4QFY27 at its new MCE Auto Hub. (Business Today)

WCT Holdings Bhd reported a 33% YoY decline in 2QFY26 revenue to RM370m, while PAT fell 20% to RM13m, mainly due to lower contributions from its property development and engineering & construction segments. (Business Today)

Tan Chong Motor Holdings Bhd narrowed its 2QFY26 loss significantly to RM22.6m from RM60.5m a year earlier, helped by lower operating and interest expenses as well as a smaller forex loss. (Business Today)

APB Resources Bhd independent non-executive chairman Dato' Mior Faridalathrash Wahid has resigned with immediate effect, citing personal reasons and other commitments, after serving in the role for about a year. (Business Today)

Samaiden Group Bhd delivered a strong FY2026, with PAT surging 94.3% YoY to RM39m, supported by accelerated construction progress on LSS5 projects, better project margins and improved cost management. It declared a second interim dividend of 1 sen per share. (Business Today)

Lim Seong Hai Capital Bhd saw 3QFY26 PAT decline 37% YoY to RM15m, while 9MFY26 revenue rose 12.7% to RM366.4m and cumulative PAT remained broadly stable at RM64.4m. It declared a 0.56 sen dividend. (Business Today)

PETRONAS Gas Bhd 1HFY26 PAT slipped 3% YoY to RM942m, mainly due to lower utilities sales volumes during planned turnaround activities and lower product prices. It declared a second interim dividend of 16 sen per share. (Business Today)

Axis Real Estate Investment Trust plans to acquire three adjoining warehouse facilities in Pulau Indah, Klang for RM61m. The properties will be leased back to the vendor for five years, providing recurring rental income. (Business Today)

MN Holdings Bhd reported strong FY2026 results, with PAT surging 92% YoY to RM92.5m and revenue rising 61% to RM869.2m, mainly driven by strong growth in its substation engineering segment. (Business Today)

Supermax Corp Bhd returned to profitability in 4QFY26, recording PAT of RM79.8m, supported by higher ASPs, stronger demand and better cost efficiency. However, its FY2026 net loss widened slightly to RM154m. (Business Today)

Bank Islam Malaysia Bhd has appointed Dato' Wan Mohd Fadzmi Che Wan Othman Fadzilah as its new independent non-executive chairman, effective Aug 27, succeeding Tan Sri Dr Ismail Bakar, who retired on Aug 22. (Business Today)

Malaysian Market Review. The FBM KLCI ended marginally lower on Monday, edging down (- 0.01%) to 1,736.33 as investors remained cautious amid weaker regional sentiment, while the ongoing earnings season and the holiday-shortened trading week kept trading activity subdued. Market breadth remained negative, with 714 decliners against 482 advancers, while 539 counters were unchanged. Sector-wise, Plantation (+0.74%), Transportation & Logistics (+0.91%) and Telecommunications & Media (+0.63%) led the gains, while Utilities (-1.71%), Technology (- 1.43%) and Property (-0.52%) were the top laggards.

Global Markets: U.S. equities closed higher overnight, with the Dow Jones Industrial Average rising (+0.30%), the S&P 500 gaining (+0.32%) and the Nasdaq Composite advancing (+0.66%), supported by a rebound in semiconductor stocks as Treasury yields continued to decline. Nvidia rose 2%, snapping a seven-day losing streak, while AMD and Micron gained (+4.90%) and (+2.50%), respectively, ahead of Nvidia's earnings due on Wednesday. However, consumer sentiment was weighed by weaker-than-expected U.S. consumer confidence data and escalating trade tensions between the U.S. and Canada. Oil prices also declined sharply, with Brent crude falling (-5.39%) to US$87.04 per barrel as the U.S. shifted towards economic pressure on Iran, easing concerns over a renewed conflict in the Persian Gulf. In Europe, the STOXX Europe 600 advanced (+0.35%), with technology, retail and travel stocks leading the gains, while the autos sector lagged amid fresh tariff concerns. Across Asia, markets ended mixed, with Japan's Nikkei 225 rising (+0.50%), South Korea's Kospi gaining (+0.68%) and China's Shanghai Composite advancing (+0.19%), while Hong Kong's Hang Seng Index edged down (-0.02%) (CNBC).

Market Outlook. We expect the FBM KLCI to trade cautiously with a mildly positive bias as trading resumes following Tuesday’s public holiday, supported by resilient domestic fundamentals. However, the ongoing earnings season is likely to keep investors selective, with corporate results and company developments driving individual stock performance. Globally, investors will focus on Nvidia’s earnings, U.S. GDP and PCE inflation data, as well as the Jackson Hole symposium for clues on the Federal Reserve’s rate outlook. Meanwhile, easing U.S. Treasury yields and lower geopolitical tensions surrounding Iran may provide some relief to risk sentiment, although external uncertainties could continue to cap market upside. Overall, we expect trading to remain selective, with stronger earnings likely to provide the key catalyst for individual counters and the broader market.

Sector focus. Technology sector to remain in focus ahead of Nvidia's earnings, which could influence sentiment towards AI-related counters. Meanwhile, Energy and Plantation stocks may face pressure following the sharp pullback in crude oil prices, while investors are likely to stay selective towards companies delivering resilient earnings results.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI has regained some near-term momentum, remaining above its 9- and 20-day moving averages and holding above the 1,720 level. However, the index remains within the broader downward channel, with the 1,750–1,760 zone continuing to cap upside. A decisive break above 1,760 would signal a stronger recovery, while failure to hold 1,720 could trigger a pullback towards 1,700, followed by 1,680. Overall, the near-term bias has improved slightly, but the broader trend remains cautious.

Company News

Kuala Lumpur Kepong Bhd slipped into a RM1.34 billion 3Q loss after a RM1.62 billion impairment on its stake in Synthomer, while parent Batu Kawan Bhd was also dragged into a quarterly loss. Excluding the impairment and Synthomer losses, KLK's underlying profit would have risen 28%. (The Edge)

Khee San Bhd's largest shareholder Datuk Seri Ngu Tieng Ung resigned as executive chairman, three days after six bank accounts of a key subsidiary were frozen under an anti-money laundering probe. (The Edge)

Foodie Media Bhd signed an MOU with Tourism Malaysia to support the Visit Malaysia 2026–2027 campaign through digital content creation and event coverage. (The Edge)

Sime Darby Property Bhd more than doubled its 2Q net profit to RM322 million and raised its dividend payout policy to 40%-60% of net profit, supported by stronger property development and growing recurring income. (The Edge)

WCE Holdings Bhd is reviewing the viability of the proposed West Coast Expressway southern extension, with its decision dependent on project costs, land acquisition, funding and government support. (The Edge)

Sunway Construction Group Bhd reported a 23.5% increase in 2Q net profit despite a 31.1% decline in revenue, while its RM6.85 billion YTD order wins have exceeded its initial FY2026 target. (The Edge)

Zetrix AI Bhd posted a 35% increase in 2Q net profit, driven by contributions from its AI, Web3 and blockchain businesses, and declared a 0.25 sen interim dividend. (The Edge)

Guan Chong Bhd reported record 2Q earnings, with net profit rising fivefold despite lower revenue, as cost reductions and lower finance costs more than offset weaker cocoa product prices. (The Edge)

Cahya Mata Sarawak Bhd returned to profitability in 2Q, although commissioning of its Samalaju yellow phosphorus plant has been delayed to 4QFY26 due to equipment issues. (The Edge)

Ajinomoto (Malaysia) Bhd reported a 3.9% decline in 1Q net profit, mainly due to weaker exports amid a softer US dollar and Middle East geopolitical issues. (The Edge)

Pestec International Bhd named several former senior executives and two China-based suppliers in its fraud and conspiracy lawsuit involving alleged dubious transactions, inflated invoices and an unauthorised guarantee. (The Edge)

Malaysian Market Review. The FBM KLCI ended broadly flat on Friday, edging down (-0.01%) to 1,736.48 as investors remained cautious amid elevated global bond yields and geopolitical uncertainties. Market breadth remained negative, with 637 decliners against 578 advancers, while 571 counters were unchanged. Sector-wise, Plantation (+1.20%), Transportation & Logistics (+0.81%) and REIT (+0.81%) led the gains, while Technology (-1.34%), Telecommunications & Media (-0.49%) and Construction (-0.49%) were the top laggards.

Global Markets: U.S. equities rebounded on Friday, with the Dow Jones rising (+0.98%), while the S&P 500 and Nasdaq Composite both gained (+0.43%), supported by stronger-than-expected corporate earnings and encouraging U.S. business activity data. However, sentiment remained cautious amid elevated Treasury yields, with all three major indices still ending the week lower. Oil prices remained elevated amid ongoing geopolitical tensions and concerns over potential supply disruptions following renewed U.S. sanctions pressure on Iran. In Europe, the STOXX Europe 600 advanced (+0.59%), supported by signs of economic resilience and strong corporate earnings. Across Asia, markets ended mixed, with Hong Kong's Hang Seng Index gaining (+1.21%) and South Korea's Kospi rising (+0.88%), while China's Shanghai Composite was broadly unchanged and Japan's Nikkei 225 declined (-0.30%) (CNBC).

Market Outlook. The FBM KLCI is expected to trade with a mildly positive bias this week, supported by the overnight rebound on Wall Street and resilient domestic demand. However, trading is likely to remain cautious as the ongoing earnings season keeps investors selective, with stock performance largely driven by corporate results and company developments. The upside could remain modest, however, as elevated U.S. Treasury yields continue to weigh on global risk appetite, while ongoing Middle East tensions could keep oil prices volatile and add to inflationary concerns. Key catalysts this week include Nvidia’s earnings, which will provide further clues on AI demand, and the Federal Reserve’s Jackson Hole symposium, where Chair Kevin Warsh’s speech will be closely watched for signals on the U.S. interest rate outlook. Bursa Malaysia will also be closed tomorrow, 25 August, in conjunction with the Birthday of Prophet Muhammad. Overall, we expect investors to remain selective, with defensive and domestically driven counters likely to remain relatively resilient amid ongoing external uncertainties.

Sector focus. Energy sector may remain in focus as elevated crude oil prices could continue to support sentiment towards oil and gas counters. Meanwhile, investors may remain selective amid elevated global bond yields and ongoing geopolitical uncertainties, with domestically driven counters potentially offering relative resilience. Plantation stocks may also attract interest should firmer commodity prices continue to support the sector.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI has regained some near-term momentum, moving back above its 9- and 20-day moving averages and holding above the 1,720 level. However, the index remains within the broader downward channel, with the 1,750–1,760 zone continuing to cap upside. A decisive break above 1,760 would signal a stronger recovery, while failure to hold 1,720 could trigger a pullback towards 1,700, followed by 1,680. Overall, the near-term bias has improved slightly, but the broader trend remains cautious.

Company News

Bank Islam Malaysia Bhd chairman Tan Sri Ismail Bakar will retire on Aug 22 after six years at the helm. (The Edge)

KPJ Healthcare Bhd president and managing director Chin Keat Chyuan will step down on Sept 1, with the group’s chief medical director serving as officer-in-charge pending a new appointment. (The Edge)

Khee San Bhd said six bank accounts of its subsidiary have been frozen following an anti-money laundering investigation, which is expected to disrupt daily operations. (The Edge)

Bintulu Port Holdings Bhd has entered into an interim agreement with the Sarawak government to ensure uninterrupted port operations during the transition from federal to state control. (The Edge)

Sunway Construction Group Bhd secured RM1.04 billion in mechanical, electrical and plumbing works contracts from a US-based multinational technology company, with completion targeted by March 2028. (The Edge)

FBG Holdings Bhd is seeking to withdraw from the joint development of the Medi-City healthcare and wellness project in Batu Kawan, Penang. (The Edge)

AEON Co (M) Bhd reported a 15.7% increase in 2Q net profit, driven by tighter cost controls and improved operational efficiency. (The Edge)

Allianz Malaysia Bhd recorded a 2.2% increase in 2Q net profit, supported by higher insurance revenue from both its general and life insurance businesses. (The Edge)

Malaysia Marine and Heavy Engineering Holdings Bhd posted its best quarterly profit in two years, with strong heavy engineering project activity lifting 2Q net profit nearly sixfold. (The Edge)

Velesto Energy Bhd saw its 2Q earnings fall sharply due to lower rig utilisation, weaker charter rates and higher expenses, although it expects stronger quarters ahead. (The Edge)

PA Resources Bhd posted a strong 4QFY26 performance, with net profit tripling on record quarterly revenue, and declared a 0.5 sen dividend. (The Edge)

Far East Holdings Bhd reported a 35.4% decline in 2Q net profit due to lower associate contributions and weaker harvest and production volumes, despite higher palm oil prices. (The Edge)

NationGate Holdings Bhd saw 2Q net profit plunge 79% as data computing sales normalised from a high base, while revenue also declined 32%. (The Edge)

Cuckoo International (MAL) Bhd reported a marginal increase in 2Q net profit despite a 19.8% decline in revenue, as softer consumer demand resulted in lower unit sales. (The Edge)

·   KLCI to expand from 30 to 50 constituents in two phases (Dec-26 and Jun-27), creating a broader and more diversified benchmark.

·   The current KLCI remains highly concentrated, with Banks and Utilities accounting for 43.1% and 16.4% of the index respectively, while Technology has no representation.

·   Technology and Construction should be the clearest sector beneficiaries from broader benchmark representation.

·   The two-stage implementation should create an extended period of index-related positioning rather than a single rebalancing event, with the 20 new constituents introduced at 50% of eventual weights in Dec-26 and reaching full weight in Jun-27.

·   We favour fundamentally strong potential entrants where index inclusion is an additional catalyst, rather than treating index eligibility as the investment thesis.

·   Key risks are front-running, valuation premiums and buy-the-rumour/sell-the-fact dynamics. We maintain our year-end KLCI target of 1,770.

Quick Take

Bursa Malaysia and FTSE Russell will expand the FBM KLCI from 30 to 50 constituents, the most significant change to the benchmark since it was reduced to 30 stocks in 2009. The 20 new constituents will be introduced at 50% of their eventual index weights on 21 December 2026 and reach full weight on 21 June 2027. The FBM70 will be renamed the FBM Mid Cap Index and reduced to 50 constituents, while the FBM100 remains unchanged.

We view the reform as structurally positive because the current KLCI is materially more concentrated than the broader market. The FTSE Russell factsheet shows Banks at 43.1% of the KLCI versus 31.1% in the FBM EMAS, Utilities at 16.4% versus 12.2%, and Technology at 0.0% versus 3.2%. The expansion should therefore narrow some of the benchmark's existing representation gaps.

We expect Technology and Construction to be among the key sector beneficiaries, while the increased breadth of the index should also improve the visibility of selected large-cap names outside the traditional banking-heavy benchmark.

Our View

The case for KLCI 50 goes beyond adding 20 more stocks. The current benchmark is concentrated in a handful of large-cap sectors and companies. The top 10 constituents account for 68.0% of KLCI market capitalisation, while Banks alone account for 43.1%. This is materially different from the broader FBM EMAS, where the top 10 account for 47.4%.

The reform should therefore gradually shift the KLCI towards a broader representation of Malaysia's corporate economy. Technology is the clearest example: the sector has 53 Main Market constituents and RM103.35bn of market capitalisation as at end-July, yet carries a 0% weight in the current KLCI. Construction similarly has 52 constituents and RM62.86bn of market capitalisation, versus only 3.5% KLCI representation.

Two-Phase Implementation: An Extended Positioning Window

The implementation timetable is an important feature of the reform. The 20 new constituents will initially receive 50% of their eventual index weights in December 2026, with the remaining 50% introduced in June 2027. We therefore expect index-related positioning to develop over a longer period rather than being concentrated on one effective date.

Ahead of December, investors may seek to anticipate the eventual inclusions and weights, while June provides a second rebalancing point as the new constituents move to full weight. This should create an extended period of potential flow support for selected entrants, although it also increases the risk that some of the expected benefit is priced in before the actual implementation. 

Sector Winners: Technology and Construction Stand Out

We expect Technology and Construction to emerge as the clearest sector beneficiaries from the KLCI expansion, as greater benchmark representation should improve institutional visibility and potential index-related demand. In contrast, Banking and Utilities could face relative weight dilution as the index broadens, creating a potential technical overhang. We view these changes primarily as index-flow implications rather than fundamental signals, and therefore favour sectors where greater benchmark visibility is supported by underlying earnings and structural growth.

KLCI 50: Index Inclusion as a New Alpha Theme

The most interesting investment opportunity, in our view, is not simply to buy every potential entrant. Index inclusion should be treated as an additional catalyst to a fundamentally sound investment case. This reduces the risk of paying an excessive premium for a purely technical event that may already be anticipated by the market.

Bursa: An Indirect Beneficiary

Bursa Malaysia could benefit from higher trading activity as institutional investors reposition portfolios around the KLCI transition. The two implementation phases should generate portfolio rebalancing and index-positioning activity, potentially supporting average daily trading value around the review windows.

We see Bursa as a market-activity proxy for the KLCI 50 transition. The longer-term benefit is potentially broader: a more representative benchmark could improve the relevance of Malaysia's equity market to domestic and international benchmark investors. However, the near-term earnings impact will depend on whether index-related activity translates into a sustained increase in trading volumes rather than a temporary spike.

Strategy

We believe investors should approach the KLCI expansion through three buckets.

First, potential new entrants. Focus on companies with a high probability of entering the KLCI and sufficient free float to receive meaningful index weights.

Second, sector beneficiaries. Technology and Construction stand out as the clearest structural winners from the broader sector representation.

Third, market infrastructure. Bursa could benefit from elevated trading activity as investors reposition portfolios around the two implementation dates.

Rather than taking a blanket approach of buying all potential entrants, we favour selective pre-positioning in fundamentally strong companies where index inclusion provides an additional catalyst to an existing earnings or structural-growth story

Key Risk: Buy The Rumour, Sell The Fact

The principal risk is that potential KLCI entrants could experience front-running ahead of the actual implementation, resulting in some of the expected index-related upside being priced in early.

There is also a risk that investors overestimate the eventual index weights of potential entrants, particularly as the final selection will depend on market capitalisation, free float and closing prices closer to the review date.

As such, we would avoid treating the KLCI expansion as a purely mechanical buying opportunity. Fundamentals should remain the first filter, with index inclusion serving as an additional catalyst. We maintain our year-end KLCI target of 1,770.

Malaysian Market Review. The FBM KLCI rose by 5.39 points, or 0.31%, to close at 1,736.71. Market breadth remained negative, with 610 losers against 577 gainers, while 610 counters were unchanged. A softer yield environment had provided relief for growth stocks while selective stock selection continues. Sector-wise, Construction (+1.24%), Utilities (+0.53%), and Plantations (+0.51%) were the main gainers while Industrial Products (-1.06%), REIT (-0.33%) and Energy (-0.30%) were the main laggards.

Global Markets: US markets were generally negative with the S&P 500 falling 0.87% to 7,641.16, the Nasdaq Composite falling 1.00% to 26,067.17, and the Dow Jones Industrial Average falling 1.32% to 52,759.21. The softer performance was attributed to reduced risk appetite after bond yields advanced during the market session, raising concerns of borrowing costs. This also comes as U.S. crude oil prices closed above $90, leading to questions about consumer resilience. In economic news, the US Initial Jobless Claims report was slightly stronger than expected. For the week ended August 15, initial claims fell 6,000 to 206,000, versus the Reuters consensus of 210,000. The previous week's figure was revised up to 212,000. Claims therefore remain toward the bottom of their 189,000–230,000 range for 2026, suggesting companies are still reluctant to shed workers despite softer economic and hiring conditions. The pan-European STOXX 600 fell marginally by 0.12% to 651.16, declining for the seventh session in a row due to higher oil prices reviving inflation concerns. In Asia, markets closed generally positive with the KOSPI rising 5.89%, the Nikkei 225 Index rising 1.36%, and the JCI rising 1.68%.

Market Outlook. The FBM KLCI is expected to trade with a cautiously positive bias, supported by Malaysia’s resilient domestic fundamentals but tempered by elevated global bond yields and geopolitical risks. Higher crude oil prices could provide some support to oil and gas-related counters although a prolonged rise in energy prices would eventually increase input costs and inflationary pressures. Globally, the near-term outlook remains more selective and defensive. While global economic data does not presently point to a severe downturn, higher energy prices, fiscal concerns and sticky long-term yields create a less supportive valuation environment.

Sector focus. Construction and Utilities may retain a positive bias on infrastructure and data-centre spending, while Plantations remain supported by firm commodity prices. Industrial Products may stay volatile amid softer demand, REITs constrained by elevated yields, and Energy mixed amid oil price support and geopolitical uncertainties.

Technical Commentary: The FBM KLCI has regained some near-term momentum, moving back above its 9- and 20-day moving averages and holding above the 1,720 level. However, the index remains within the broader downward channel, with the 1,750–1,760 zone continuing to cap upside. A decisive break above 1,760 would signal a stronger recovery, while failure to hold 1,720 could trigger a pullback towards 1,700, followed by 1,680. Overall, the near-term bias has improved slightly, but the broader trend remains cautious.

Company News

Kossan Rubber Industries Bhd’s net profit for the three months ended June 30, 2026 (2QFY2026) surged to RM64.47 million — the highest quarterly net profit since FY2022 — from RM31.15 million a year ago. (The Edge)

Mah Sing Group Bhd has agreed to dispose of a piece of land in Sepang, Selangor, for RM617.86 million cash to data centre developer WG Malaysia X Sdn Bhd. (The Edge)

Sunway Healthcare Holdings Bhd's net profit rose to RM78.16 million in the three months ended June 30, 2026 (2QFY2026) from RM41.39 million a year earlier. (The Edge)

Telekom Malaysia Bhd's second-quarter net profit fell 9.3% to RM365.48 million from RM402.97 million a year earlier. (The Edge)

TXCD Bhd, formerly known as Ageson Bhd, has been granted another six-month extension until Feb 7, 2027 to submit its revised regularisation plan to Bursa Securities. (The Edge)

7-Eleven Malaysia Holdings Bhd’s net profit in 2QFY2026 plunged 58.5% to RM8.28 million from RM19.96 million a year earlier, after rapid expansion of its store network pushed operating costs higher. (The Edge)

Malayan Cement Bhd’s net profit for the three months ended June 30, 2026 (4QFY2026) was RM222.92 million, a 35% increase from the same quarter a year earlier, outpacing a 17% y-o-y growth in revenue to RM1.29 billion. (The Edge)

YTL Corp Bhd’s fourth-quarter net profit fell 47.1% to RM327.56 million from RM618.91 million for 4QFY2025, though revenue rose more than 15% to RM8.81 billion from RM7.65 billion. (The Edge)

Genting Bhd posted a net loss of RM27.10 million for the three months ended June 30, 2026 (2QFY2026), compared with a net profit of RM243.50 million a year earlier. (The Edge)

Magnum Bhd announced that it plans to progressively resume its operations in Kedah, as it posted an 8.4% growth in its second-quarter net profit compared with the same period a year ago, as profit margin expanded amid lower gaming prize payouts. (The Edge)

Dialog Group Bhd’s fourth-quarter net profit rose 13.6% y-o-y to RM167.47 million from RM147.38 million, as stronger contributions from its businesses, particularly in Malaysia, lifted earnings. (The Edge)

Malaysian Pacific Industries Bhd, which provides outsourced semiconductor packaging and testing services, saw only a marginal rise in its latest quarterly net profit despite a 30.6% jump in revenue  as higher costs and taxation ate into its bottomline. (The Edge)

Bursa Malaysia has publicly reprimanded property developer Hua Yang Bhd for breaching listing rules governing the purchase of its own shares, after the company acquired 4.48 million shares from a shareholder through a direct business transaction instead of the market. (The Edge)

LBS Bina Group Bhd’s net profit for the quarter ended June 30, 2026 (2QFY2026) fell 44.4%, mainly because the previous year had benefitted from a reversal of contingency sum no longer required for completed projects.  (The Edge)

·   Exports grew +38.0% YoY in July (Jun: +45.5%), while imports remained firm at +36.4% (Jun: +43.1%). Consequently, the trade surplus widened to RM22.5bn (Jun: RM15.8bn).

·   Manufacturing (+42.6% YoY; Jun: +47.4%) remained the key growth driver, while commodity exports were mixed.

·   Overall, trends in capital and intermediate goods imports suggest firm industrial activity that should continue to support export growth towards year-end.

·   We raise our 2026 export growth forecast to +26.2% YoY (previously: +16.3%), reflecting robust 7M26 growth of +29.2%.

·   We are particularly positive on E&E and commodity exports, albeit with increasing headwinds towards year-end.

Exports remain on a firm footing

Malaysia’s exports sustained double-digit growth of +38.0% YoY in July, above consensus of +35.0%, albeit easing from +45.5% in June. Import growth also remained firm at +36.4% (Jun: +43.1%), driven mainly by robust intermediate goods imports (+40.8%; Jun: +41.2%). Consequently, the trade surplus widened to RM22.5bn (Jun: RM15.8bn).

Manufacturing and palm oil boost exports

Manufacturing exports remained the key growth driver, expanding +42.6% YoY (Jun: +47.4%) and contributing +37.0ppts to headline export growth (Jun: +41.3ppts). E&E continued to lead the expansion (+51.0%; Jun: +57.0%), supported by continued strength in the global tech upcycle and AI-related semiconductor demand. Non-E&E manufacturing also remained robust (+33.5%; Jun: +37.3%), driven mainly by machinery, equipment & parts (+41.6%; Jun: +18.4%) and palm oil-based manufactured products (+24.0%; Jun: +20.2%).

Commodity exports were a mixed bag. Agriculture exports rebounded (+5.6% YoY; Jun: -7.3%), driven by firmer palm oil exports (+7.8%; Jun: -18.3%) amid higher average unit values. In contrast, mining exports slowed sharply (+9.6%; Jun: +97.1%), dragged by a decline in crude petroleum (-79.4%; Jun: +110.2%) and moderation in LNG (+14.1%; Jun: +83.3%), highlighting the volatility in energy prices and oil & gas exports.

By destination, exports to the US (+79.8% YoY; Jun: +108.7%), China (+30.2%; Jun: +36.1%) and Taiwan (+96.0%; Jun: +44.8%) remained robust, likely driven by E&E products. Meanwhile, shipments to other major trading partners moderated, including Japan (+21.9%; Jun: +45.8%), South Korea (-3.2%; Jun: +42.7%) and ASEAN markets such as Singapore (+16.7%; Jun: +47.7%), Thailand (+37.5%; Jun: +51.8%) and Indonesia (+35.0%; Jun: +53.6%).

Import trends point to firm order pipeline     

Capital goods imports moderated (+24.0% YoY; Jun: +61.9%), underscoring its inherently volatile nature. Nonetheless, the import value remained elevated at RM22.5bn (Jun: RM23.4bn), well above the RM17.0bn average recorded during Jan-May 2026, suggesting sustained investment momentum. Meanwhile, intermediate goods imports remained robust (+40.8%; Jun: +41.2%), pointing to healthy order pipelines. Overall, import trends suggest firm industrial activity that should continue to support export growth towards year-end.

Raising export forecast

We raise our 2026 export growth forecast to +26.2% YoY (previously: +16.3%; 2025: +6.6%), reflecting robust 7M26 growth of +29.2% (7M25: +4.4%). This is consistent with our positive GDP growth outlook of +5.0% for 2026. Going forward, we expect the E&E sector to remain resilient and drive overall export momentum in 2H26, with structural growth in AI, EVs and other related industrial segments supporting a steady order pipeline over the medium term.

We are also particularly positive on commodity exports in 2H26. Elevated crude oil prices and potential trade diversion arising from disruptions in the Straits of Hormuz should support Malaysia’s oil & gas exports. Separately, firmer B50 biodiesel demand from Indonesia should keep palm oil demand supported, while the anticipated intensification of El Niño, with hotter and drier weather conditions between October and December, should underpin firmer palm oil prices. As of 19 August, palm oil prices had risen 16.8% to RM4,596/mt from the start of the year.

That said, exports may face increasing headwinds towards year-end as front-loaded demand from earlier stockpiling activities unwinds, alongside an unfavourable high base from the corresponding period last year. Other key risks include a steep re-escalation of geopolitical tensions in the Middle East weighing on global demand, as well as uncertainty surrounding US trade policy. Malaysia remains exposed to higher tariffs as the US Section 301 investigation into excess capacity is still ongoing.

Malaysian Market Review. The FBM KLCI fell by 2.04 points, or 0.12%, to close at 1,731.32. Market breadth remained negative, with 701 losers against 478 gainers, while 563 counters were unchanged. The market weakness was evident in growth stocks, reflecting pressure from higher US Bond yields. Sector-wise, Telecommunications (+0.55%) and Healthcare (+1.15%) were the main gainers while Construction (-1.22%) and Technology (-1.57%) were the main laggards.

Global Markets: The S&P 500 rose 0.21% to 7,707.98 and the Nasdaq Composite rose 0.16% to 26,331.09. The Dow Jones Industrial Average rose 0.22% to 53,463.05. The gains were attributed to a surprise announcement from the U.S. Treasury which announced the doubling of the size of its liquidity-support buyback operations for longer-dated Treasury securities, from $2 billion to $4 billion per operation (Reuters). Consequently, bond yields fell, alleviating concerns about high borrowing costs. In other news, the US FOMC Minutes for July 28-29 indicated that most participants supported keeping rates unchanged although some argued that higher rates may be necessary should inflation stay elevated. Overall, the Minutes point towards an increasing focus on inflation persistence (Reuters). The pan-European STOXX 600 fell 0.11% to 651.16 with inflationary concerns outweighing the relief from a decline in European bond yields after the U.S. Treasury’s announcement. In Asia, markets closed negative with Japan's Nikkei 225 falling 3.16%, the KOSPI Index falling 5.80%, and the Shenzhen Index falling 5.01%.

Market Outlook. The Malaysian market is expected to trade with a cautiously positive bias, supported by the overnight rebound on Wall Street and easing U.S. Treasury yields. The U.S. Treasury’s decision to double the size of its liquidity-support buyback operations for longer-dated securities helped push bond yields lower, providing some relief to equity valuations, particularly growth and technology stocks. Globally, sentiment is likely to remain supported by the U.S Treasury’s announcement with lower bond yields being supportive for technology and other growth- related counters. However, this is somewhat tamed by elevated oil prices and the ongoing Middle East developments.

Sector focus. Growth-related counters, particularly Technology and Construction, are expected to benefit from lower sovereign bond yields, which should provide some support to valuations and borrowing costs. Plantation counters should remain supported by firm commodity prices. Overall, we expect a balanced sector performance, with growth sectors benefiting from the softer yield environment while Plantation counters offer earnings support from resilient commodity prices.

Technical Commentary: The FBM KLCI has been hovering around its 9- and 20-day moving averages, reflecting indecision within its prevailing downward channel. Repeated rejections at the 1,750–1,760 zone suggest that sellers remain firmly in control of this resistance area. A break below 1,720 could trigger a deeper pullback towards the 1,700 support, with 1,680 emerging as the next key support level if profit-taking intensifies. The outlook would turn more constructive only if the index decisively breaks above 1,750.

Company News

Solarvest Holdings Bhd’s first-quarter net profit saw a 19.8% jump to RM19.02 million from RM15.88 million a year ago, mainly due to higher share of profits from associate companies. (The Edge)

PETRONAS Chemicals Group Bhd returned to the black with a second-quarter net profit of RM414 million, compared to a net loss of RM1.08 billion in the same quarter last year when the petrochemical company booked foreign exchange losses and wrote down the value of assets at its Swedish specialty unit Perstorp. (The Edge)

Lotte Chemical Titan Holding Bhd said no decision has been made by its South Korean parent amid news reports of a potential disposal that triggered a spike in its share price. (The Edge)

Electrical engineering firm CBH Engineering Holding Bhd’s second-quarter net profit rose to RM24.53 million from RM10.1 million a year earlier, while revenue doubled to RM120.93 million from RM59.68 million. (The Edge)

S P Setia Bhd posted a net profit of RM98.1 million for the second quarter ended June 30, 2026 (2QFY2026), as opposed to RM99.8 million a year earlier. (The Edge)

Hong Leong Industries Bhd reported a 22.6% year-on-year increase in its fourth quarter net profit to RM143.59 million from RM117.16 million. (The Edge)

UEM Sunrise Bh more than doubled its second-quarter net profit to RM46.85 million from RM22.41 million a year earlier, as higher revenue recognition from property developments and a land divestment lifted earnings. (The Edge)

Pekat Group Bhd posted record-high second-quarter earnings of RM14.19 million, compared with RM11.02 million a year earlier, as all of its business divisions generated stronger contributions.  (The Edge)

Genting Plantations Bhd's net profit for the second quarter fell 27% from a year earlier, dragged by lower crude palm oil (CPO) prices and an absence of disposal gain.  (The Edge)

Pure-play bus builder Bus Cap Bhd has signed a memorandum of understanding (MOU) with BYD Malaysia Sdn Bhd, a local unit of Chinese conglomerate BYD, in Shenzen, China, to formalise a collaboration to jointly advance a Malaysia-based new energy commercial vehicle platform.  (The Edge)

Plantation company TSH Resources Bhd's second-quarter net profit rose 6.7% to RM52.51 million from RM49.23 million in the same quarter a year ago on better extraction rates, lower costs and stronger joint-venture contributions.  (The Edge)

·   Taiwan-Malaysia diplomatic tensions have flared up following PM Anwar Ibrahim’s remarks on Taiwan, raising concerns over regional stability and Taiwanese investment sentiment.

·   We see the development as more of a sentiment risk than a fundamental growth shock, with FDI confidence the key transmission channel.

·   Near-term earnings impact on technology companies should remain minimal, although counters with higher Taiwan exposure warrant closer monitoring.

·   The FBM ACE Index looks increasingly stretched, with forward P/E at 19.8x and technical indicators pointing to higher profit-taking risks.  

·   We remain constructive on Malaysian equities, maintaining our FBM KLCI year-end target of 1,770 and favouring a barbell investment strategy. 

Quick Take

Malaysian Prime Minister Anwar Ibrahim’s recent remarks describing Taiwan as a Chinese province seeking independence have drawn a strong response from Taiwan’s Ministry of Foreign Affairs (MOFA), which warned that such comments could threaten regional stability and undermine Taiwanese businesses’ confidence in investing in Malaysia.

The issue comes at a sensitive time as Malaysia continues to position itself as a key beneficiary of global supply-chain diversification, particularly in semiconductors, E&E and data centres. While the immediate economic impact should be limited, prolonged diplomatic tensions could raise concerns over Malaysia’s perceived geopolitical neutrality and future FDI appeal.

Our View

We believe the latest development is more of a medium-term FDI-confidence and equity-market sentiment risk than an immediate macroeconomic shock.

Malaysia and Taiwan have deep commercial linkages, particularly in the semiconductor and E&E industries. Existing Taiwanese investments are unlikely to be materially disrupted by the latest diplomatic episode. The bigger concern is future capital allocation, as multinational companies increasingly consider geopolitical stability when deciding where to locate new manufacturing and technology investments.

Malaysia has benefited from being able to engage with both China and Western-aligned economies. This flexibility has strengthened its position as a relatively neutral ASEAN manufacturing and supply-chain hub. A prolonged deterioration in Malaysia-Taiwan relations could therefore weaken part of this competitive advantage.

Economy: FDI Is the Key Transmission Channel

According to our Economist, we do not expect the latest development to materially alter Malaysia’s bilateral trade relationship with Taiwan at this juncture. Malaysia has a deep trade relationship with Taiwan, the country’s fifth-largest trading partner after Singapore, China, the US and the EU in 1H26. Bilateral trade with Taiwan rose sharply by 34.7% YoY to RM147.8bn in 1H26, equivalent to 8.2% of Malaysia’s total trade (See Figure 1).

More importantly, Malaysia and Taiwan are closely integrated within the global semiconductor value chain. Malaysia has established strong capabilities in semiconductor assembly, testing and packaging, accounting for around 13% of the global market. Thus, we expect bilateral trade and investment to remain intact, including in advanced packaging and testing facilities and potentially higher-value-added segments, as companies expand capacity along the broader semiconductor supply chain.       

Furthermore, given the highly integrated and specialised nature of semiconductor supply chains, we see limited scope for businesses to quickly shift to alternative suppliers in response to political developments. Our back-of-the-envelope calculations suggest that E&E products accounted for as much as 65.9% of Malaysia’s exports to Taiwan in 1Q26. This deep integration should limit the risk of near-term disruptions to bilateral trade.

That said, we caution that the bigger risk lies in the impact on foreign investor sentiment and investment decisions over the longer term. While Taiwanese companies with established Malaysian facilities are unlikely to immediately shift their production base, ongoing geopolitical developments could weigh on their future investment decisions. This is particularly critical for E&E, where Malaysia competes with regional economies to move up the value chain amid the ongoing AI-driven technology upcycle.  

Overall, we believe Malaysia’s economic outlook remains intact for now. We maintain our full-year 2026 GDP growth forecast at 5.0% YoY, at the upper end of BNM’s official forecast range of 4.0–5.0%. In particular, the recent strength in E&E exports and AI-related investment should continue to be supported by the global technology upcycle and ongoing supply-chain diversification. 

Semiconductor Supply Chain: The Most Sensitive Area

The semiconductor industry deserves particular attention given Taiwan’s importance to the global chip ecosystem and Malaysia’s growing role in semiconductor assembly, testing and other back-end activities.

Malaysia has been one of the beneficiaries of global semiconductor supply-chain diversification, while Taiwanese companies have been an important part of the country’s high-value manufacturing ecosystem.

This creates two-way dependence. Malaysia benefits from Taiwanese technology, capital and supply-chain relationships, while Taiwanese companies benefit from Malaysia’s skilled workforce, infrastructure, established semiconductor ecosystem and strategic access to regional markets.

Hence, the risk is unlikely to be an abrupt disruption to existing operations. Instead, the concern is whether future Taiwanese investment could become more cautious or whether incremental projects could be redirected to alternative ASEAN locations. This would become a more meaningful macro risk if Malaysia begins losing its competitive position in new semiconductor and E&E investment.

Market Implications

For the Malaysian equity market, we expect the initial impact to be felt through foreign investor sentiment and valuation multiples rather than earnings. Given Taiwan’s deep integration with Malaysia’s technology and E&E ecosystem, prolonged tensions could raise concerns over future Taiwanese investment and semiconductor supply-chain expansion, although we see limited near-term impact on existing operations and earnings.

Foreign investors may increasingly incorporate geopolitical positioning into their assessment of Malaysia. This could result in a higher perceived country risk premium, particularly if the diplomatic dispute escalates or becomes part of a broader deterioration in Malaysia-China-US-Taiwan relations. The implication is therefore that geopolitical uncertainty could raise the risk premium, weaken foreign investor appetite and potentially compress valuations, rather than causing an immediate deterioration in earnings.

This distinction is important. Corporate earnings are unlikely to change materially in the near term, but the market can re-rate stocks well before fundamentals deteriorate. This could be particularly relevant for technology and E&E stocks, where valuations are often driven not only by near-term earnings but also by expectations of future capacity expansion, foreign investment and supply-chain growth.

Technology Sector Implications

We see technology and E&E as the most sensitive sectors. However, our Technology Analyst sees minimal near-term earnings impact on Malaysian technology companies, as the current dispute remains rhetorical rather than policy-driven. Malaysia’s semiconductor supply-chain relationship with Taiwan, both as an equipment/services partner and investment source, has historically remained resilient despite periodic political tensions.

Nevertheless, Taiwan’s importance varies significantly across our technology coverage. FRONTKN (BUY, TP: RM5.86) and MI (BUY, TP: RM6.38) have the highest disclosed Taiwan revenue exposure at 73.8% and 39.0% respectively, followed by VITROX (BUY, TP: RM11.12) at 12.1% and SKYECHIP (BUY, TP: RM3.76) at 11.2%. We believe these counters warrant closer monitoring should the diplomatic tensions escalate or Taiwanese investment sentiment towards Malaysia deteriorate.

For now, we see the issue as more of a sentiment risk than an earnings risk. We maintain our constructive view on the sector, supported by the ongoing semiconductor upcycle, while favouring companies with strong earnings visibility and diversified customer exposure.

What Would Change Our View?

We would become more concerned if three developments emerge.

First, Taiwanese companies begin delaying or reassessing planned Malaysian investments. This would indicate that the issue is moving beyond diplomatic rhetoric and affecting real capital allocation.

Second, new semiconductor and E&E investments increasingly shift towards alternative ASEAN markets. A persistent loss of new projects would suggest that Malaysia’s competitive advantage as a neutral supply-chain hub is being eroded.

Third, foreign fund flows and technology-sector valuations weaken disproportionately. This would suggest that investors are beginning to price a higher geopolitical risk premium into Malaysian equities.

For now, we see none of these as sufficient to warrant a change to our broader Malaysia growth outlook, as we view the development as a sentiment risk rather than a fundamental growth shock. Hence, we would not advocate reducing Malaysia exposure solely on the back of the latest Taiwan-Malaysia diplomatic spat.

ACE Index: Profit-Taking Risks Rising After Strong Rally

Meanwhile, we expect the FBM ACE Index to face near-term profit-taking following its recent strong rally, with valuations becoming increasingly stretched. The index’s forward P/E has risen to 19.8x as of 18 Aug 2026, above the available-period mean of 16.9x and +1SD level of 18.9x, suggesting limited room for further re-rating in the near term (See Figure 2).  

From a technical perspective, the index has surged c.25% from its March 2026 low of around 4,180 to 5,300 currently, bringing it close to the long-term descending trendline resistance at around 5,400. The 14-day RSI has also risen above 70, suggesting that the recent rally is becoming technically stretched and increasing the risk of near-term consolidation or profit-taking (See Figure 3).

Hence, we advise traders to lock in some profits, while selective buying in defensive and fundamentally resilient names should continue to support the broader market.

Conclusion

Overall, we view the latest Malaysia-Taiwan diplomatic tensions as a near-term sentiment risk rather than a fundamental threat to Malaysia’s growth outlook. While prolonged diplomatic tensions could weigh on foreign investor confidence and future FDI, particularly in the technology and E&E sectors, Malaysia’s strong economic linkages and ongoing supply-chain diversification should remain supportive.

Strategy

Given the heightened political uncertainty ahead of the 16^th General Election (GE16), an increasingly fragile regional market environment, persistent foreign fund outflows and tail risks from a potential disruption to the Strait of Malacca, we expect market volatility to remain elevated in the months ahead. Nevertheless, we view market volatility as an opportunity to position for our year-end KLCI target of 1,770. Hence, we recommend a barbell investment strategy, balancing exposure between defensive, earnings-resilient companies and high-quality structural growth stocks. Consistent with this strategy, our preferred investment ideas for 2H2026 are as follows.

Malaysian Market Review. The FBM KLCI rose by 7.47 points, or 0.43%, to close at 1,733.36. However, market breadth remained negative, with 762 losers against 438 gainers, while 576 counters were unchanged. Higher market exposure toward defensive names such as Plantation stocks were supported by their defensive earnings profile and higher commodity gains during a period of geopolitical uncertainty. Sector-wise, Plantation (+0.68%), Industrial Products (+0.78%), and Finance (+0.29%) were the main gainers while Consumer (-0.78%) and Utilities (-1.17%) were the main laggards.

Global Markets: The S&P 500 declined 0.69% to 7,691.76, while the Nasdaq Composite slipped 1.33% to 26,289.71. The Dow Jones Industrial Average fell 0.22%, to 53,343.40. Pressure was believed to have risen from lingering Middle East tensions while elevated bond yields fed concerns about broader borrowing costs (Reuters). In economic news, July U.S. Industrial activity expanded with industrial production rising 0.2% MoM, following a 0.3% MoM rise in June with the latest report suggesting a steady and modest growth. In addition, the low level of Manufacturing capacity utilisation suggested that further room for expansion was possible. Regarding the Middle-East conflict, President Trump has said that the U.S. was not in any ongoing negotiations with Iran nor were there any intention to begin said talks. The pan-European STOXX 600 fell 0.69% to 651.90 with Middle-East tensions continuing to affect the sentiment and outlook for the region. In Asia, markets closed negative with Japan's Nikkei 225 falling 2.54%, the KOSPI Index falling 1.55%, and the Shenzhen Index falling 0.56%.

Market Outlook. Given the overnight decline on Wall Street and lingering Middle East tensions, Malaysian equities are likely to trade cautiously today. Meanwhile, we expect the FBM ACE Index to face profit-taking following its recent strong rally. Hence, we advise traders to lock in some profits. Nevertheless, local equities should remain supported by selective buying in defensive names. Globally, sentiment is likely to remain fragile, with volatile oil prices, ongoing Middle East developments and elevated sovereign bond yields weighing on fundamentals, particularly across technology and other growth-sensitive sectors.

Sector focus. Plantation, financial and selected industrial names may continue to benefit from resilient earnings and firm commodity prices, while consumer and growth-oriented stocks could remain relatively subdued. Overall, sector performance continues to remain selective with defensive counters expected to be favoured.

Technical Commentary: The FBM KLCI has been hovering around its 9- and 20-day moving averages, reflecting indecision within its prevailing downward channel. Repeated rejections at the 1,750–1,760 zone suggest that sellers remain firmly in control of this resistance area. A break below 1,720 could trigger a deeper pullback towards the 1,700 support, with 1,680 emerging as the next key support level if profit-taking intensifies. The outlook would turn more constructive only if the index decisively breaks above 1,750.

Company News

AMMB Holdings Bhd's net profit came in higher at RM520.23 million in the first quarter ended June 30, 2026 (1QFY2027), up marginally from RM516.18 million a year ago. (The Edge)

Duopharma Biotech Bhd reported a 48% earnings jump in the second quarter thanks to higher-margin products and a stronger ringgit that lowered input costs. (The Edge)

Four shareholders have withdrawn their requisitions to remove four directors of Destini Bhd ahead of an extraordinary general meeting on Friday (Aug 21). (The Edge)

West River Bhd has won approval for two small hydropower projects in Perak under the feed-in-tariff programme.  (The Edge)

Dutch Lady Milk Industries Bhd's second-quarter net profit rose to RM38.2 million — its highest quarterly profit in five years — from RM23.4 million in 2QFY2025, driven by stronger revenue, favourable exchange rate effects and the absence of one-off transition costs incurred a year earlier. (The Edge)

Johor Plantations Group Bhd’s second-quarter net profit fell 32% to RM51.15 million from RM75.19 million a year ago, weighed down by higher production costs. (The Edge)

KPJ Healthcare Bhd reported a 27% increase in its second-quarter net profit to RM103.92 million from RM82.02 million a year earlier, driven by higher patient visits, more surgeries and improved case mix. (The Edge)

Highway concessionaire WCE Holdings Bhd saw an 11.2% growth in its toll revenue for the first quarter of its financial year 2027, keeping operational earnings before interest, taxes, depreciation and amortisation (Ebitda) positive, even as financing costs kept its bottom line in the red with a net loss of RM24.5 million — little changed from the RM25.33 million recorded a year ago. (The Edge)

DRB-Hicom Bhd’s second-quarter net profit fell 47.4% to RM30.56 million from RM58.09 million a year earlier, as it booked a tax expense of RM26.56 million compared with a RM4.49 million tax credit in the same quarter last year, while costs rose. (The Edge)

ITMAX System Bhd has secured a RM186.84 million contract from the Social Security Organisation (Socso) to develop and operate an artificial intelligence (AI)-powered employment portal. (The Edge)

Glovemaker Kossan Rubber Industries Bhd has proposed to acquire two cleanroom product businesses for RM48.41 million. (The Edge)

Lotte Chemical Corp is reviving plans to sell Lotte Chemical Titan Holding Bhd as well as a stake in its Indonesian unit, Korea Economic Daily reported. (The Edge)

Malaysian Market Review. The FBM KLCI was fell marginally by 1.50 points, or 0.09%, to close at 1,725.89. Market breadth remained negative, with 625 losers against 559 gainers, while 548 counters were unchanged. The muted performance was attributed to geopolitical risks remaining as the dominant near-term variable. Sector-wise, Telco (+1.20%), Utilities (+0.88%), and Construction (+0.65%) were the main gainers while Property (-0.51%) and Finance (-0.42%) were the main laggards.

Global Markets: The S&P 500 declined 0.52% to 7,745.06, while the Nasdaq Composite slipped 0.32% to 26,644.91. The Dow Jones Industrial Average fell 0.51%, to 53,459.78. Overall, investors turned more cautious ahead of major U.S. retail earnings and as renewed geopolitical concerns alleviated oil prices after Iran and the U.S. ruled out an extension of the MOU signed in June to end the conflict (Reuters, CNBC). According to Reuters, Iran has decided to shift their policy to appear more aggressive, citing an unnamed Iranian official that stated a move in Iranian policy towards a ‘fully offensive one.’ Meanwhile, President Trump had informed reporters that he would not seek to extend the ceasefire with Iran. The pan-European STOXX 600 fell 0.22% to 656.41 with European sentiment becoming more cautious after a strong earnings-driven run due to Middle-East developments. In Asia, markets closed positively before the recent Middle-east developments evolved, with Japan's Nikkei 225 advancing 0.74% and the Shenzhen Index rising 2.44%, while Hong Kong’s Hang Seng rose 1.34%.

Market Outlook. The immediate market environment remains cautious rather than outright bearish. Malaysia continues to have pockets of relative strength, but external risks are likely to dictate short-term sentiment. The most constructive scenario would be stabilising oil prices, no further escalation in the Middle East, resilient U.S. consumer earnings and softer bond yields. This combination could encourage investors to move back into risk assets and provide room for the KLCI to recover. The key downside scenario would be a further escalation in U.S.-Iran tensions accompanied by another surge in crude oil and bond yields, particularly if U.S. retail earnings simultaneously signal weaker consumer demand. Such a combination would intensify concerns over slower growth and persistent inflation and could keep investors defensive. For now, we expect investors to favour selective stock-picking over broad market exposure, with attention centred on domestic defensives, construction, selected energy names and technology counters supported by semiconductor demand, while keeping a close watch on financial heavyweights for signals on the KLCI's broader direction.

Sector focus. Telco and Utilities are expected to remain relatively resilient as investors favour defensive sectors amid heightened geopolitical and global growth uncertainty. Overall, sector performance is likely to stay selective, with investors favouring counters with stronger earnings visibility and defensive characteristics.

Technical Commentary: The FBM KLCI closed at 1,725.89. The index remains above its 20-day and 120-day moving averages, while its failure to hold above the 9-day moving average suggests that near-term momentum has weakened. Repeated rejections near the 1,750-1,760 zone suggest sellers are firmly defending this resistance level. A break below 1,720 would open the door to a deeper pullback towards the 1,700 support, with 1,680 the next line of defence should profit-taking accelerate. The outlook will only become more positive if the index clearly breaks above the 1,750 level.

Company News

Ekovest Bhd plans to raise up to RM355.85 million via a renounceable rights issue of up to 1.78 billion shares at 20 sen each to fund key infrastructure and property projects—including the LIKE expressway—and pare down debt. (The Edge)

Destini Bhd directors Datuk Abd Aziz Sheikh Fadzir and Ismail Mustaffa have resigned from the board effective Aug 15. (The Edge)

99 Speedmart Retail Holdings Bhd posted a 13.36% increase in its second-quarter net profit to RM163.95 million from RM144.63 million a year earlier, with revenue growing to RM3.08 billion from RM2.71 billion as it recorded increased customer traffic from its expanding outlet network. (The Edge)

Kerjaya Prospek Group Bhd, which has emerged as the largest shareholder of ES Sunlogy Bhd has raised its stake in the mechanical and electrical (M&E) engineering and renewable energy firm to 31% from 28.27%.  (The Edge)

Alam Maritim Resources Bhd’s chief executive and managing director Datuk Azmi Ahmad has been remanded to facilitate an ongoing investigation by the Malaysian Anti-Corruption Commission (MACC). (The Edge)

Sports Toto Bhd’s fourth-quarter net profit jumped 55% year-on-year to RM62.54 million amid sharply lower direct costs and indirect expenses. (The Edge)

Malakoff Corp Bhd’s second-quarter net profit halved to RM31.7 million from RM62.8 million a year earlier as revenue dropped to RM1.91 billion from RM2.02 billion on lower capacity payments from Tanjung Bin Power Sdn Bhd (TBP). (The Edge)

Main Market newcomer SkyeChip Bhd posted a first-quarter net profit of RM13.92 million on a gross profit margin of nearly 42%, supported by robust demand for its proprietary semiconductor solutions across artificial intelligence (AI), high-end performance computing and automotive applications. (The Edge)

Straits Energy Resources Bhd plans to diversify into engineering, procurement, construction and commissioning (EPCC) services, saying the move would allow it to pursue higher-value contracts in renewable energy, data centres and smart city infrastructure. (The Edge)

Kumpulan Jetson Bhd is countersuing its co-founder Datuk Teh Kian Ann for RM1.27 million after rejecting his lawsuit seeking RM891,847 for alleged outstanding refunds from a cancelled employee share option scheme. (The Edge)

·   Malaysia's headline inflation eased to +1.8% YoY in July (Jun: +1.9%), marginally below consensus of +1.9%, driven mainly by easing transport costs.

·   Core inflation eased to a one-year low of +1.8% YoY (Jun: +1.9%), pointing to subdued underlying price pressures.

·   We maintain our 2026 and 2027 inflation forecasts at +2.0% YoY, with upside to price pressures from lagged passthrough of higher business costs, volatility in crude oil prices and El Niño impacts on food prices.

·   The still-benign inflation outlook supports our expectation for BNM to keep the OPR on hold at 2.75% through 2026.

Subdued inflation in July

Malaysia's headline inflation eased to +1.8% YoY in July (Jun: +1.9%), marginally below consensus of +1.9%. On a month-on-month basis, inflation was unchanged for a second straight month (Jun: 0.0%), suggesting that price momentum has stabilised following the earlier buildup in price pressures amid global supply chain disruptions.

The moderation was driven mainly by further easing in transport costs (+1.4% YoY; Jun: +2.8%), reflecting lower pump prices for unsubsidised RON95 (RM3.47/litre; Jun: RM3.69/litre), RON97 (RM4.07/litre; Jun: RM4.33/litre) and diesel (RM4.14/litre; Jun: RM4.50/litre). For context, Brent crude averaged USD84.1/bbl in both June and July, down from its peak of USD103.7/bbl in May, providing some relief to domestic energy prices.

Meanwhile, inflation across other categories remained uneven. Food & beverages accelerated to +1.8% YoY (Jun: +1.4%), driven by both “food away from home” (+2.5%; Jun: +2.4%) and “food at home” (+1.2%; Jun: +0.5%). Price pressures were particularly evident in “meat” (+3.2%; Jun: +1.5%), “milk, other dairy products & eggs” (+0.8%; Jun: +0.1%) and “vegetables” (+1.0%; Jun: -1.8%). Nonetheless, the passthrough of higher fertiliser and poultry feed costs into broader food inflation remains relatively contained for now.

Underlying price pressures remain steady

Core inflation eased to a one-year low of +1.8% YoY (Jun: +1.9%), below its 2021-2025 average of +2.1%, pointing to subdued underlying price pressures. The low core reading suggests the absence of excessive demand pressures and steady underlying demand. On a month-on-month basis, core inflation was unchanged for a second consecutive month (Jun: 0.0%), in line with the broader headline inflation trend.

Upside to inflation in 2H26

We maintain our 2026 and 2027 inflation forecasts at +2.0% YoY. Inflation has remained relatively stable at 1.7-2.0% since the onset of the Middle East conflict in March, underscoring the limited spillover from supply disruptions thus far. Going forward, existing targeted RON95 and diesel subsidies should continue to keep inflation pressures in check, with the government likely to maintain current measures to cushion households from higher energy prices.

That said, upside to price pressure remains. Several factors could drive price pressures higher in 2H26, including i) lagged passthrough of higher business input costs into consumer prices. With PPI rising to a four-year high of +9.2% YoY in June, it is increasingly difficult for businesses to absorb the higher costs without passing them on to consumers; ii) volatility in crude oil prices amid prolonged tensions in the Middle East; and iii) El Niño and related unfavourable weather conditions, which could drive food prices higher.

OPR to stay put

Overall, inflation is likely to remain within BNM's projection range of 1.5%-2.5% YoY in 2026. The still-benign inflation outlook suggests no urgency for BNM to adjust monetary policy at this juncture, supporting our expectation for BNM to keep the OPR on hold at 2.75% through 2026.

Malaysian Market Review. The FBM KLCI fell 7.32 points, or 0.42%, to close at 1,727.39, from Thursday’s 1,734.71. Market breadth was negative, with 616 losers against 540 gainers, while 554 counters were unchanged. The soft performance despite a better-than-expected YoY GDP print of 6.0% reflected market attention towards whether economic momentum can be sustained through the second half of 2026 and, crucially, whether that growth translates into stronger corporate earnings. By sector, Utilities (+2.21%) was the main gainer, while Industrial Products (-1.19%) and Construction (-1.04%) were the main laggards.

Global Markets: The S&P 500 declined 0.17% to 7,785.76, while the Nasdaq Composite slipped 0.28% to 26,729.16. The Dow Jones Industrial Average fell 107.58 points, or 0.20%, to 53,732.41. On the economic front, July US retail sales unexpectedly declined 0.6% MoM, pointing towards softer consumer spending momentum while the US consumer confidence fell in August, with the index falling to 51.0 from 55.2. European equities ended the week lower as renewed geopolitical tensions surrounding the US-Iran conflict outweighed support from a strong corporate earnings season. The pan-European STOXX 600 fell 0.21% to 657.86, bringing its four-week winning streak to an end. The benchmark declined around 0.3% for the week, although it remained within 1% of its record high after gaining roughly 3% over the preceding four weeks. In Asia, markets traded mixed, with Japan's Nikkei 225 advancing 0.59% and South Korea's KOSPI rose 2.42% due to enthusiasm for AI and semiconductor stocks, while the Hang Seng Kong's fell 1.10% (Reuters).

Market Outlook. In local markets, strong economic fundamentals and a stable monetary-policy environment continue to provide a constructive backdrop for equities. Nevertheless, following the stronger-than-expected GDP performance and recent market gains, the next phase of the market is likely to be increasingly earnings-driven rather than purely macro-driven. Global equity markets remain supported by strong corporate earnings, moderating inflation and expectations that major central banks are approaching the end of their tightening cycles. In the near term, the key factors to monitor will be US monetary policy, consumer spending, global inflation, corporate earnings, oil prices and geopolitical developments. Overall, the global equity environment remains constructive, but the balance of risks suggests a more selective approach may be appropriate after the strong gains recorded across several major markets.

Sector focus. Utilities may remain relatively resilient on continued defensive interest, while Industrial Products and Construction could see near-term consolidation after recent weakness. Overall, sector performance is likely to stay selective, with investors favouring counters with stronger earnings visibility and defensive characteristics.

Technical Commentary: The FBM KLCI closed at 1,727.39, retreating after an early test of 1,742.79. The index remains above its 20-day and 120-day moving averages, while its failure to hold above the 9-day moving average suggests that near-term momentum has weakened. Repeated rejections near the 1,750-1,760 zone suggest sellers are firmly defending this resistance level. A break below 1,720 would open the door to a deeper pullback towards the 1,700 support, with 1,680 the next line of defence should profit-taking accelerate. The outlook will only become more positive if the index clearly breaks above the 1,750 level.

Company News

Kerjaya Prospek Group Bhd is now the largest shareholder in ACE Market-listed ES Sunlogy Bhd after acquiring shares from 18 shareholders for RM40.18 million, increasing its stake to 28.27%. (The Edge)

Destini Bhd, has reshuffled its board, with Datuk Seri Dr Shahril Mokhtar returning as executive director and group managing director, ahead of the group’s Aug 21 extraordinary general meeting (EGM) to remove four directors, including executive chairman Datuk Abd Aziz Sheikh Fadzir and long-serving executive director Ismail Mustaffa. (The Edge)

Pos Malaysia Bhd incurred a second-quarter net loss of RM43.46 million, down from RM45.42 million in the same quarter last year, as revenue rose 9% to RM481.3 million from RM441.57 million. (The Edge)

CelcomDigi Bhd saw its 2QFY2026 net profit fall 9.3% to RM398 million from RM439 million in the same period last year due to higher expenses, joint-venture losses and lack of profits from assets sold. (The Edge)

Maxis Bhd’s second-quarter net profit rose 9.6% to RM436 million from RM398 million in the same period last year, as revenue grew 3.7% to RM2.66 billion from RM2.56 billion. (The Edge)

Hextar Global Bhd is diversifying into property development through a RM3.8 billion gross development value mixed-use project in Shah Alam with a unit of Perbadanan Kemajuan Negeri Selangor (PKNS). (The Edge)

Ocean Vantage Holdings Bhd has been appointed as panel contractor by Petroliam Nasional Bhd (PETRONAS) under two packages, collectively covering 10 of the 13 packages under PETRONAS’ Pan Malaysia Appointment of Panel Contractors for the Provision of Integrated Well Continuity Services. (The Edge)

Carlsberg Brewery Malaysia Bhd’s second-quarter net profit rose by 1.2% to RM82.92 million compared to RM81.93 million a year ago, as revenue climbed 5% to RM514.89 million from RM490.17 million. (The Edge)

DPS Resources Bhd is exploring a collaboration with a subsidiary of China state-owned enterprise China Energy International Group Co Ltd for the development of data centres and supporting infrastructure. (The Edge)

Magna Prima Bhd has entered into an agreement to take over and complete the stalled 8 Conlay mixed-use development in Kuala Lumpur, in a restructuring exercise capped at RM700 million. (The Edge)

Coastal Contracts Bhd is selling an offshore support vessel to an undisclosed buyer for RM175.78 million. (The Edge)

Affin Bank Bhd saw an 11% decline in its 2QFY2026 net profit to RM127.52 million from RM143.49 million in the same period a year prior, due to rising provisions for bad debts. (The Edge)

Datuk Lee Kok Khee is stepping down from his role as group CEO at Atlan Holdings Bhd and will be appointed as group adviser.  (The Edge)

·   Malaysia’s GDP expanded by +6.0% YoY in 2Q26 (1Q26: +5.4%), exceeding the advance estimate of +5.8%, driven by a surge in net exports.

·   Given the robust current account performance in 1H26, we raise our 2026 current account surplus projection to +2.0% of GDP (previously +1.5%).

·   We maintain our 2026 GDP growth forecast at +5.0% YoY, with the balance of risks tilted to the upside following the stronger-than-expected 2Q26 growth.

·   Our 2026 GDP forecast implies growth moderating to +4.4% in 2H26, reflecting an unfavourable base effect and rising headwinds.

·   We believe BNM will likely assess the rising headwinds in 2H26, keeping the OPR on hold at 2.75% through 2026.

Positive surprise for 2Q26 growth       

Malaysia’s GDP expanded by +6.0% YoY in 2Q26 (1Q26: +5.4%), exceeding the advance estimate and Bloomberg consensus of +5.8%. The solid performance came despite concerns over supply chain disruptions and heightened cost pressures following the Middle East tensions. On a seasonally adjusted basis, GDP rebounded to +2.5% QoQ (1Q26: -0.03%), the strongest sequential growth since 2Q22, suggesting a pickup in underlying growth momentum.

Net exports lifted growth

On the expenditure side, net exports was the key growth driver, contributing +2.4ppts to headline GDP growth (1Q26: +0.6ppts). Real exports surged (+17.0% YoY; 1Q26: +5.2%) on robust E&E and petroleum products shipments, tourism and ICT services. Meanwhile, imports jumped (+13.9%; 1Q26: +4.6%), reflecting firmer intermediate goods demand. As a result, net exports rose sharply (+168.5%; 1Q26: +13.5%).

Domestic demand performance was mixed. Private consumption remained firm (+4.8% YoY; 1Q26: +4.7%), supported by a resilient labour market and income-related policy support. Total investment moderated (+4.6%; 1Q26: +7.3%) on easing private investment (+4.3%; 1Q26: +7.8%), consistent with weaker capital goods imports, although this was partly offset by firmer public investment (+6.3%; 1Q26: +5.3%).

On a sectoral basis, manufacturing and mining lifted headline growth. Manufacturing accelerated (+7.3% YoY; 1Q26: +5.9%) amid robust external demand for E&E and AI-related components. Mining rebounded strongly (+9.2%; 1Q26: -2.1%), contributing +0.5ppts to headline GDP growth (1Q26: -0.1ppts), driven by firmer natural gas production and a low base from maintenance activities last year. Services also surprised on the upside, rising to +5.9% (1Q26: +5.6%), above the advance estimate of +5.4%. Nonetheless, agriculture declined 
(-3.7%; 1Q26: +2.6%), while construction moderated further (+6.5%; 1Q26: +7.7%).

Current account supported by goods surplus                 

The current account recorded a smaller surplus (+RM10.8bn; 1Q26: +RM15.2bn), equivalent to 2.0% of GDP (1Q26: 3.0%), as the services account turned into a marginal deficit (-RM0.7bn; 1Q26: +RM6.4bn) following three consecutive quarters of surplus. Meanwhile, the primary income deficit widened (-RM27.2bn; 1Q26: -RM20.9bn) on rising profit repatriation by foreign firms. Nonetheless, the goods account surplus widened (+RM40.7bn; 1Q26: +RM33.6bn) amid firmer exports, providing some relief to the overall current account balance. Given the larger-than-expected current account surplus of +RM25.9bn (+2.5% of GDP) in 1H26, we raise our 2026 current account surplus projection to +2.0% of GDP (previously +1.5%).

Potential growth moderation in 2H26

We maintain our full-year 2026 GDP growth forecast at +5.0% YoY, at the upper end of BNM’s official forecast range of 4.0-5.0%, following our recent upward revision from +4.7%. Nonetheless, the stronger-than-expected +6.0% GDP growth in 2Q26 has further tilted the balance of risks to the upside, with full-year growth potentially reaching 5.1-5.5% should the strong momentum sustain amid continued strength in E&E exports and AI-related investment.

That said, our 2026 GDP forecast of +5.0% YoY implies growth moderating to +4.4% in 2H26, partly reflecting high base effect from strong 2H25 growth. More importantly, the drag from Middle East tensions may become more visible in 2H26 as the risk shifts from supply disruption to persistent cost pressures, which could increasingly weigh on production and investment. While businesses have largely mitigated supply risks through alternative suppliers, BNM noted that these come at higher prices, with PPI rising to a four-year high of +9.2% in June.

Furthermore, economic momentum may soften as earlier frontloading and stockpiling activities unwind. Malaysia’s July manufacturing PMI showed firms’ purchasing activity remained broadly flat despite higher new orders, suggesting that inventory frontloading is beginning to fade. Other key external risks include i) a sharp re-escalation of Middle East tensions, potentially extending beyond the Strait of Hormuz to the Red Sea, and ii) unfavourable US trade policies, both of which could trigger a sharp deterioration in global trade.

Steady OPR outlook for now

To recap, BNM delivered a pre-emptive 25-bp cut in July 2025. With full-year growth potentially reaching 5.1-5.5% YoY, above BNM’s current forecast range, the stronger-than-expected 1H26 performance has raised the prospect of a rate hike. Nonetheless, we believe BNM is likely to adopt a wait-and-see approach and assess the rising headwinds in 2H26. Our 2026 baseline GDP growth forecast of +5.0% and inflation forecast of +2.0% also remain within BNM’s current projections. Thus, we expect BNM to keep the OPR on hold at 2.75% through 2026.

Malaysian Market Review. The FBM KLCI sliding 6.90 points, or 0.40%, to close at 1,734.71, compared with Wednesday's close of 1,741.61. On the broader market, losers outnumbered gainers 692 to 421. The softer close was driven by selling pressure in oil-related counters as investors booked profits following the previous session's rally, with sentiment also weighed down by lingering concerns over the global economic outlook and regional headwinds. By sector, REIT (+0.43%) and Construction (+0.37%) were the only gainers, while Plantation (-1.00%) and Utilities (-0.80%) led the laggers.

Global Markets: The Dow Jones inched up 0.13%, or 69.72 points, to 53,839.99, while the S&P 500 adding 0.65% to close at a record 7,798.99, and the Nasdaq gained 0.81% to end at 26,803.03. Brent crude futures shed more than 2% to close at $87.07 per barrel and WTI futures slid more than 2% to settle at $81.25, as traders weighed falling oil demand amid the ongoing U.S.-Iran conflict. On the inflation front, July's producer price index came in unchanged, below expectations for a 0.2% increase, with core PPI rising 0.2% versus the expected 0.3%, following Wednesday's in-line CPI reading of 0.1% month over month, further reinforcing expectations that the Fed will hold off on a September rate hike. Meanwhile, Europe's STOXX 600 slipped 0.04% to close at 659.24, reflecting a broadly subdued tone across the region. In Asia, markets traded mixed, with Japan's Nikkei 225 advancing 1.16% and South Korea's KOSPI jumping 3.56% on strong buying interest, while Hong Kong's Hang Seng bucked the regional strength to ease 0.17% (CNBC).

Market Outlook. Softer than expected PPI and CPI readings have reinforced expectations that the Fed will hold rates steady in September, supporting a constructive backdrop for an earnings driven market, even as declining oil prices reflect growing concerns over demand amid the ongoing U.S.-Iran conflict. We remain conservative on the durability of this rally, as much of the recent strength has been concentrated in a narrow group of large-cap tech and AI-linked names, leaving broader market breadth still relatively thin. Locally, easing oil prices could reduce near term earnings momentum for commodity linked counters that had recently outperformed, while broader sentiment on the KLCI may find some support from cooling inflation and steadier regional risk appetite. We stay cautious to conservative on the local market today, as investors weigh moderating inflation and improving rate expectations against lingering uncertainty over the Hormuz situation and its impact on regional trade flows.

Sector focus. REIT and Construction counters may see continued interest after bucking Thursday's broader weakness, supported by defensive positioning and steady project flow respectively. Plantation and Utilities could remain under pressure after leading the declines, with sentiment likely staying soft as investors book profits following recent strong runs in both sectors.

Technical Commentary: The FBM KLCI closed at 1,734.71, retreating after an early test of 1,742.79. The index remains above its 20-day and 120-day moving averages, while its failure to hold above the 9-day moving average suggests that near-term momentum has weakened. Nevertheless, the broader structure remains technically intact, while repeated rejections near the 1,750-1,760 zone suggest sellers are firmly defending this resistance level. A break below 1,720 would open the door to a deeper pullback towards the 1,700 support, with 1,680 the next line of defence should profit-taking accelerate. The outlook will only become more positive if the index clearly breaks above the 1,750 level. 

Company News 

Pharmaniaga Bhd posted a more than three fold jump in net profit to RM12.49 million for the second quarter ended June 30, 2026 (2QFY2026), from RM3.96 million the year before, thanks to interest savings from partial repayment of borrowings and effective inventory management. (The Edge)

AirAsia Group Bhd, formerly known as AirAsia X Bhd, posted a net loss of RM527.16 million in the 2QFY2026, widening from RM154.9 million in the preceding quarter, weighed down by a surge in jet fuel prices amid geopolitical tensions in the Middle East, along with foreign exchange losses. (The Edge)

LPI Capital Bhd has declared a 65 sen special dividend funded by the proceeds from the sale of its 1.13% stake in Public Bank Bhd, alongside a 25 sen interim dividend for the quarter ended June 30, 2026. (The Edge)

Keyfield International Bhd, which reported a steep 65.2% drop in its second-quarter net profit, expects its earnings to improve in the coming quarters, supported by higher vessel utilisation. Its chief financial officer Eugene Kang said all of the group’s vessels, except the newly acquired Keyfield Joyful, are currently on hire, putting the group in a stronger position for the second half of 2026. (The Edge)

Gamuda Bhd’s Australian subsidiary, DT Infrastructure Pty Ltd, has secured two engineering, procurement and construction (EPC) contracts for the Ganymirra and Majors Creek solar and battery hybrid projects in Australia from Edify Energy with a combined contract value of A$569 million (about RM1.64 billion). (The Edge)

Tomei Consolidated Bhd is partnering pawnbroking operator Ta Yoong Group for its pawnbroking venture. (The Edge)

Building materials supplier Chuan Huat Resources Bhd plans to raise as much as RM5.5 million through a private placement to fund the expansion of its wire mesh production capacity in Nilai, Negeri Sembilan. (The Edge)

TSR Capital Bhd has secured a RM16.9 million contract to undertake site clearing and earthworks for an industrial development in Seremban, Negeri Sembilan. (The Edge)

GuocoLand (Malaysia) Bhd will be delisted from Bursa Malaysia Securities Bhd with effect from 9am on Aug 18, following the completion of its privatisation by controlling shareholder GLL (Malaysia) Pte Ltd (GLLM). (The Edge)

Malaysian Market Review. The FBM KLCI rose 10.15 points, or 0.59%, to 1,741.61, compared with Tuesday's close of 1,731.46. Market breadth was positive, with 665 gainers against 509 decliners. The stronger close was supported by gains in utilities and petrochemical counters as crude oil prices approached $90 per barrel, reflecting a broader rotation into commodity-linked stocks amid persistently elevated energy prices fuelled by geopolitical risks. By sector, Energy (+1.62%) and Utilities (+1.65%) led the gainers, while REIT (-0.40%) and Property (-0.26%) topped the laggers.

Global Markets: The Dow Jones slipped 21.58 points, or 0.04%, to end at 53,770.27, while the S&P 500 climbed 0.26% to close at 7,748.50, and the Nasdaq added 0.54% to 26,588.49. July's CPI came in as expected, with headline inflation rising 0.1% on the month and 3.4% on the year, while core CPI advanced 0.2% on the month and 2.5% on the year, both marking a slight decrease from June, even as U.S. oil prices pushed above $83 a barrel amid dwindling hopes for a reopening of the Strait of Hormuz. Meanwhile, Europe's STOXX 600 fell 0.16% to close at 659.48, reflecting a broadly softer tone across the region. In Asia, markets traded mixed, with Japan's Nikkei 225 gaining 0.83% and South Korea's KOSPI surging 3.68% on strong buying interest, while Hong Kong's Hang Seng bucked the regional strength to fall 0.83% (CNBC).

Market Outlook. Following the in-line July inflation report, Fed rate-hold odds for September have risen to around 60%, and strong AI-related earnings continue to support market strength. Oil prices held largely steady around $89 for Brent and $83 for WTI even after deadly attacks on vessels in the Red Sea and Gulf of Oman heightened shipping-route risks, with concerns over Middle East supply remaining prevalent despite signs the U.S. and Iran may be nearing a Hormuz agreement. For KLCI, while elevated crude oil prices have strengthened the earnings outlook for commodity-linked counters, the same dynamic weighed on broader regional sentiment, with most Asian equity markets ending lower as investors reassessed the impact of higher energy costs on inflation, interest rates, and corporate earnings. We stay cautious to conservative on the local market going forward, as tangible progress on Hormuz is still needed before risk sentiment can meaningfully improve.

Sector focus. Utilities and Energy counters may extend their gains, supported by continued buying momentum and firm crude oil prices respectively. Construction could remain resilient, supported by sustained data centre and AI-related investments, which should underpin job flows and earnings visibility for selected contractors.

Technical Commentary: The FBM KLCI closed at 1,741.61, with the index now pressing against the upper boundary of the downward-sloping channel that has capped price action since peaking in January. Although this is a positive sign, we are still cautious because the index has tried several times since May to break above this resistance level but has not been able to sustain the breakout. The overall downtrend has also not been clearly broken yet. For the trend to truly turn positive, the index needs to break above the channel and then stay above the 1,760 – 1,770 level. On the downside, 1,720 remains the immediate support, while a failure to sustain the rally could see the index retreat towards 1,700.

Company News 

Sunway REIT raised distribution per unit by nearly 11% as property income expanded in the second quarter ended June 30, 2026 (2QFY2026) with better revenue from shopping malls and hotels. (The Edge)

Malaysia Smelting Corp Bhd’s second quarter net profit more than doubled to RM34.02 million, from RM13.95 million a year earlier, helped by higher refined tin sales and prices, as well as improved efficiency from its mining and smelting operations, particularly at its facility in Pulau Indah, Selangor. (The Edge)

Information and communications technology (ICT) distributor VSTEC Bhd  posted a 50% year-on-year (y-o-y) jump in net profit to RM RM30.31 million for 2QFY2026, from RM20.17 million a year earlier, driven by broad-based growth across its business segments and higher public sector project deliveries. (The Edge)

Industronics Bhd has lodged a police report and removed former executive director Liu Wing Yee Amy from all positions in the group after identifying more than HK$96 million in trade receivables concentrated among a small number of customers at its Hong Kong subsidiary, ECGO International Ltd. (The Edge)

Kerjaya Prospek Group Bhd  has secured a RM223 million contract from Sunway Majestic Sdn Bhd to build a small office or home office (SOHO) development in Johor Bahru. (The Edge)

Southern Score Builders Bhd has secured another subcontract for a data centre, this time worth RM105 million in Puncak Alam, Selangor. (The Edge)

Eita Resources Bhd’s unit EITA Elevator (Malaysia) Sdn Bhd has accepted a letter of award (LOA) from Prasarana Malaysia Bhd for a works contract worth RM62.3 million. (The Edge)

PTT Synergy Group Bhd’s unit PTT Development Sdn Bhd (PTTD) has entered into five separate sale and purchase agreements (SPAs) with Koperasi Kakitangan Bank Rakyat Bhd (Sekatarakyat) for a total consideration of RM260 million. (The Edge)

Binasat Communications Bhd, in which businessman Datuk Eddie Ong holds a 29.82% stake, has terminated a RM73 million acquisition of 241 units of fully furnished hotel suites in Empire City, Damansara Perdana, from Cosmopolitan Avenue Sdn Bhd (CASB). (The Edge)

Malaysian Market Review. The FBM KLCI dropped 3.91 points, or 0.23%, to 1,731.46, as rising crude oil prices and persistent geopolitical concerns weighed on investor sentiment. Market breadth was slightly negative, with 574 decliners against 570 gainers. The decline was mainly driven by continued uncertainty surrounding the Strait of Hormuz, as the prolonged standoff raised concerns over potential disruptions to global crude oil supplies, keeping oil prices elevated and weighing on overall market sentiment. By sector, Healthcare (+1.23%) and Energy (+0.99%) led the gainers, while Plantation (-0.38%) and Property (-0.34%) topped the laggers.

Global Markets: The Dow Jones shed 184.13 points, or 0.34%, to end at 53,791.85, while the S&P 500 lost 0.32% to close at 7,728.20, and the Nasdaq declined 0.60% to 26,445.45. Communication services led the laggards as Alphabet and AppLovin dropped 3.8% and nearly 6% respectively, while Information technology was also weak, with Nvidia closing flat despite a major AI infrastructure partnership announcement, and Apple falling more than 1%. Oil prices rose amid continued Middle East uncertainty, with WTI crude up 1.3% to $83.20 a barrel and Brent crude up about 1.4% to $88.91, after Iran reiterated the Strait of Hormuz would not reopen until its conditions are met, though sentiment found some support from Pakistani Defense Minister Khawaja Asif's comments suggesting a peace deal may still be shaping up. Meanwhile, Europe's STOXX 600 edged up 0.01% to close at 660.51, reflecting a broadly flat session across the region. In Asia, Japan's Nikkei 225 was closed for a holiday, while South Korea's KOSPI advanced 0.73% and Hong Kong's Hang Seng fell 1.10% (CNBC).

Market Outlook. Attention now turns to key U.S. inflation data, with the July CPI report due Wednesday and PPI on Thursday, both pivotal following last Friday's weak jobs report; CPI is expected to continue its downward trend, reinforcing the case for the Fed to hold rates steady, though services inflation remains a persistent concern. With elevated oil prices renewing inflationary pressures just as labour market softness raises growth concerns, the Fed faces a delicate balancing act, and markets are likely to stay volatile in the near term as sentiment swings between Hormuz-related headlines and incoming inflation data. The standoff over the Strait of Hormuz continues to show little sign of resolution, with oil prices extending their advance after a sharp jump in the previous session as investors assess the risk of prolonged disruptions to global crude flows and uncertainty over when the critical waterway could fully reopen. With geopolitical tensions showing no clear path to de-escalation, the KLCI is likely to remain under pressure in the near term, with cautious sentiment and range-bound trading expected as investors await greater clarity on the Hormuz situation.

Sector focus. Healthcare counters could remain in focus, supported by continued buying momentum, with Energy also benefiting from firm crude oil prices. Meanwhile, Property counters may remain soft following its recent underperformance against the broader market.

Technical Commentary: Since peaking in January, the FBM KLCI has remained within a downward-sloping channel, and this structure stays intact following Tuesday's pullback to 1,731.46, after touching an intraday high of 1,738.21. The Dark Cloud Cover candlestick formed last Thursday also remains valid, reinforcing the case for renewed bearish pressure within the channel. Despite holding above its key moving averages, the index's inability to clear the channel's upper resistance keeps the broader bias tilted cautious. We therefore maintain our view that the KLCI will only turn constructive on a decisive break above the channel's upper boundary. Until then, 1,720 remains the immediate support, followed by 1,700 should profit-taking resume, while the 1,760–1,770 zone stays the stiff resistance to watch. 

Company News 

Mr DIY Group (M) Bhd reported a 15.2% drop in its net profit for the second quarter ended June 30 (2QFY2026), to RM134.41 million from RM158.58 million in 2QFY2025, due to increased costs. (The Edge)

Scicom (MSC) Bhd saw its shares hit a nine-year high, extending year-to-date gains to 60%. (The Edge)

Handal Energy Bhd expects to release its 2025 annual report and financial statements by Oct 15, 15 days before its final deadline. (The Edge)

Cypark Resources Bhd secured feed-in tariff approval to increase the capacity of its waste-to-energy (WTE) plant in Port Dickson from the Sustainable Energy Development Authority. (The Edge)

HE Group Bhd has accepted a letter of intent to undertake RM47 million worth of electrical works for a data centre in Johor. (The Edge)

SD Guthrie Bhd is selling 556.96 acres of land in Kulai to Sime Darby Property Bhd for RM418.5 million after receiving no proposals for a joint industrial park development on the site since May 2025, due to the land being zoned for residential use. (The Edge)

SD Guthrie also reported that its net profit almost doubled for its quarter ended June 30 (2QFY2026), rising to RM987 million from RM505 million in the same quarter last year. (The Edge)

Yoong Onn Corporation Bhd’s 60%-owned subsidiary, TC Homeplus Pte Ltd, appointed subcontractor Precise Development Pte Ltd to build a S$13.16 million (about RM41.18 million) four-storey industrial building in Singapore. (The Edge)

West River Bhd secured a RM22.56 million subcontract to carry out electrical works at a data centre in Johor with an undisclosed entity. (The Edge)

• The Industrial Production Index (IPI) rose +6.5% YoY in June (May: +8.5%), albeit below market expectations of +7.2%, led by firmer manufacturing output.

• Latest indicators suggest manufacturing momentum should remain firm in July.

• A moderation could become more pronounced towards year-end amid a high base and fading stockpiling support. 

• Key risks include elevated production costs and potentially unfavourable US trade policy.

• We have revised our manufacturing growth forecast higher to +6.2% (previously: +4.5%).

Manufacturing strength offsets mining weakness

IPI sustained its firm momentum at +6.5% YoY in June (May: +8.5%), although slightly below market expectations of +7.2%. The steady expansion was underpinned by firmer manufacturing output (+7.3%; May: +6.6%) and electricity production (+6.7%; May: +4.8%), partly offset by weaker mining output (+3.1%; May: +19.8%). On a month-on-month basis, IPI accelerated to +5.5% (May: +1.4%), reflecting still-firm industrial momentum.

Mining growth was weighed by a decline in petroleum output (-3.3% YoY; May: -0.7%) and a moderation in natural gas (+7.4%; May: +37.4%), partly as the low base effect from last year gradually eased. We expect mining activity to expand at a more moderate pace in the coming months as base effects normalise.

Domestic-oriented manufacturing gaining strength

Manufacturing remained the key growth driver, with its contribution to headline IPI growth rising to +5.6ppts (May: +5.1ppts). The export-oriented cluster maintained its firm momentum, expanding +7.6% YoY (May: +8.8%), supported by gains in “electric & electronic products” (+13.6%; May: +16.2%), “machinery & equipment” (+10.6%; May: +6.8%) and “plastics products” (+2.2%; May: +1.9%).

Meanwhile, the domestic-oriented cluster accelerated to +6.4% YoY (May: +2.0%), underpinned by stronger growth in “food processing products” (+6.3%; May: +3.7%), “basic pharmaceuticals, medicinal chemical & botanical products” (+6.4%; May: +2.5%) and “basic metals” (+8.2%; May: +7.3%). Despite the positive performance, we caution that growth in the domestic-oriented cluster remains inherently volatile.

E&E cushions near-term resilience

On a positive note, Malaysia’s manufacturing PMI remained in expansionary territory at 50.7 in July (Jun: 50.7). Manufacturers ramped up production following stronger new orders, supported by firmer demand, new product launches and newly secured tenders. Thus, despite the expected unwinding of stockpiling activities, we expect domestic manufacturing momentum to remain firm in July.

Further out, growing chip applications across AI, EV and industrial segments should continue to underpin export-oriented manufacturing, particularly the E&E segment. Our positive view is supported by the latest robust nominal manufactured goods export performance, which surged +47.3% YoY in June. Meanwhile, domestic-oriented industries should provide additional support to overall industrial activity, underpinned by resilient domestic demand.

Headwinds in 2H26     

We remain cautiously optimistic on the domestic manufacturing outlook for 2H26. A moderation in industrial momentum could become more pronounced towards year-end, given the high base from last year’s strong 2H25 performance and fading support from stockpiling activities. Notably, June manufacturing PMI indicated that firms’ purchasing activity remained broadly flattish, suggesting that inventory frontloading is beginning to unwind.

Other key risks to Malaysia’s manufacturing outlook include: i) elevated material and logistics costs, with PPI reaching a four-year high of +9.2% YoY in June; and ii) potentially unfavourable US trade policy, which could materially disrupt export-oriented production.

Manufacturing growth revised higher     

Manufacturing production expanded by a robust +7.4% YoY in 2Q26, reinforcing our expectation of a strong 2Q26 GDP performance ahead of the actual GDP release on 14 August. We forecast 2Q26 GDP growth at +5.8%, broadly in line with the advance estimate. Given the stronger-than-expected 1H26 growth, we recently raised our 2026 GDP growth forecast to +5.0% (previously +4.7%), alongside a corresponding upward revision to our manufacturing growth forecast to +6.2% (previously +4.5%).

• The unemployment rate held at 3.0% in June despite external headwinds.

• Labour market outlook remains positive, underpinned by continued strength in services and manufacturing employment. 

• We remain cognisant of moderating hiring momentum as lingering Middle East tensions add to business uncertainty and operating costs.

• We maintain our unemployment rate forecast of 3.0% in 2026 (2025: 3.0%).

Steady unemployment rate at 3%   

Malaysia’s labour market remained stable in June, with the unemployment rate holding at 3.0% despite external headwinds from geopolitical tensions, reflecting firm domestic economic momentum. Nonetheless, the number of unemployed rose for the fourth consecutive month to 517.8k (May: 513.4k), while active jobseekers increased to 410.9k (May: 408.0k), suggesting some moderation in labour market conditions and warranting close monitoring in our view.

Employment growth was broadly flat at +0.01% MoM (May: +0.05%), with continued hiring in the services sector, particularly “transportation & storage”, “accommodation” and “food & beverage”. Employment in manufacturing and construction also increased, while agriculture and mining posted declines during the month.

By employment status, growth in the number of employers (+0.07% MoM; May: +0.2%), employees (+0.02%; May: +0.04%) and self-employed persons (+0.04%; May: +0.1%) all eased during the month. The labour force edged up +0.04% to 17.34m (May: 17.34m), while the labour force participation rate was unchanged at 70.9%.

Firm economic activity to support hiring   

Looking ahead, we remain positive on the labour market outlook, with job creation underpinned by continued strength in the domestic economy. The services sector, which accounts for nearly two-thirds of total employment, should remain the key anchor of hiring momentum, supported by firm household spending and ongoing policy support for consumption.

Meanwhile, manufacturing employment, particularly in the E&E segment, should continue to benefit from sustained global semiconductor demand amid the ongoing AI upcycle. The E&E segment accounts for c.27% of domestic manufacturing output. Over the longer term, continued data centre and broader ICT investments should further support demand for higher-skilled workers and underpin private-sector wage growth

Caution warranted as hiring momentum softens                

While the near-term labour market outlook remains broadly intact, we are cognisant of the recent moderation in hiring momentum, particularly as lingering Middle East tensions add to business uncertainty and operating costs. The latest Malaysia manufacturing PMI for July indicated that firms trimmed their staffing levels. Notably, besides resignations and layoffs, manufacturers cited efforts to reduce headcounts to lower operating costs.

Separate data from SOCSO showed that loss of employment (LOE) rose for the fourth consecutive month to 9,013 in July (Jun: 8,100), the highest since January this year. On a positive note, job vacancies rose to 242,434 (June: 103,394), providing some offset to the increase in job losses.

Stable outlook ahead 

Overall, we anticipate the lagged impacts from elevated material and operating costs on business activity and demand conditions to become more pronounced in 2H26. While this could cap hiring demand, employment prospects should remain broadly intact. For now, indications suggest that businesses have managed supply disruptions relatively well, while the passthrough of higher business costs to consumer inflation remains manageable. We maintain our unemployment rate forecast of 3.0% in 2026 (2025: 3.0%).

Malaysian Market Review. The FBM KLCI ended marginally lower on Monday, easing 0.38 point, or 0.02%, to close at 1,735.37, as investors stayed largely on the sidelines amid uncertainties over US monetary policy and geopolitical developments. However, gainers outpaced losers 713 to 443 on the broader market, though sentiment remained cautious as softer rate expectations were weighed against renewed pressure from higher crude oil prices and ongoing uncertainty surrounding the Strait of Hormuz. By sector, Technology (+2.52%) led the gainers, followed by Energy (+0.96%), bucking the overall market trend, while REIT (-0.13%) and Plantation (-0.22%) lagged behind.

Global Markets: The Dow Jones fell 60.95 points, or 0.11%, to 53,975.98, while the S&P 500 slipped 0.06% to close at 7,753.11, and the Nasdaq declined 0.32% to 26,605.36. Iran continued to resist direct talks with the U.S. despite progress on a separate deal with Oman to reopen the Strait of Hormuz, pushing oil prices sharply higher, with WTI crude up 5.1% to $82.13 per barrel and Brent crude up 5% to $87.72, as U.S. Strategic Petroleum Reserve stockpiles fell to their lowest level since January 1983. This followed a strong week for equities, with all three indexes posting their best weekly gains since April after a weak July jobs report raised hopes the Fed will hold off on further rate hikes. Meanwhile, Europe's STOXX 600 edged up 0.03% to close at 660.45. In Asia, markets traded broadly higher, with Japan's Nikkei 225 surging 2.08% and South Korea's KOSPI advancing 0.65%, while Hong Kong's Hang Seng also gained 1.05% (CNBC).

Market Outlook. Sentiment remains mixed as investors weigh easing Fed rate hike expectations, with September hike odds falling to around 52% from 67% a week earlier, against persistent Iran-U.S. tensions over the Strait of Hormuz, where Tehran continues to rule out talks absent compensation for perceived U.S. violations of the June agreement; while markets appear somewhat desensitised to repeated flare-ups amid strong corporate earnings, oil prices are likely to stay elevated and reactive to Hormuz-related developments. For KLCI, elevated crude oil prices and geopolitical uncertainty could continue to drive near-term volatility, but resilient domestic economic conditions and sustained buying interest in selected heavyweights should provide support, with the local market expected to trade with a mild upward bias this week as investors remain selective and focused on fundamentally strong companies. 

Sector focus. Technology counters may extend Tuesday's strong outperformance, supported by continued buying momentum, while Utilities and Energy could stay in focus amid firm gains on likely defensive positioning and higher crude oil prices respectively, while Plantation and REIT counters could remain soft after lagging the broader market.

Technical Commentary: The FBM KLCI closed at 1,735.37, holding just above the 1,735 support level. The index remains confined within the downward-sloping channel that has capped price action since peaking in January. Despite the narrow trading range, the index continues to hold above its 9-day, 20-day, and 120-day moving averages. This suggests that the short-term trend is remains positive, although the broader market continues to move within the same broader range. A decisive break above the channel's upper boundary and the 1,760 – 1,770 resistance zone would be needed to signal a genuine trend shift. On the downside, 1,735 is the first important support level to watch. If selling pressure continues, the next support level is at 1,700. 

Company News 

Hextar Retail Bhd received a conditional voluntary takeover offer from major shareholders Datuk Ong Choo Meng and Ong Kook Liong at a cash offer of 43 sen per share. (The Edge)

AME Elite Consortium Bhd will construct a 220,000 sq ft manufacturing facility in Iskandar Puteri, Johor, for HYA Industry (Malaysia) Sdn Bhd, a subsidiary of Shanghai-listed Wuxi Hyatech Co, Ltd. (The Edge)

Hup Seng Industries Bhd saw a 21.5% year-on-year net profit growth in its second quarter financial report ended June 30 (2QFY2026). (The Edge)

Well Chip Group Bhd saw a nearly 15% increase in net profit for its second quarter ended June 30, 2026, (2QFY2026) to RM23.93 million from RM20.30 million in the same quarter in 2025. (The Edge)

MN Holdings Bhd’s unincorporated joint-venture with Pembinaan Tajri Sdn Bhd (PTSB) secured a RM122.31 million contract from Tenaga Nasional Bhd to install a new underground power cable system between Tasek Gelugor and Bertam. (The Edge)

Inta Bina Group Bhd secured a RM115.65 million contract from Sime Darby Property Bhd to build 61 units of three-storey houses and one electricity substation in Setapak, Kuala Lumpur. (The Edge)

ITMAX System Bhd secured approval from the Malaysian Communications and Multimedia Commission for a RM134.3 million project to develop communications infrastructure for the Kota Kinabalu Smart City project. (The Edge)

Industronics Bhd is being sued by Bluemount Investment Fund, one of its substantial shareholders, over a loan agreement between the company and certain directors and officers. (The Edge)

Malaysian Market Review. The FBM KLCI fell 0.08% to 1,735.75 on Friday, extending its pullback for a second straight session. Market breadth was positive, with advancers outpacing decliners 577 to 567, on turnover of about 3.56 billion units worth RM3.47 billion. Despite the two-session pullback, the benchmark still posted a weekly gain of 0.63%, rising 10.85 points from 1,724.90 a week earlier. By sector, Utilities (+1.76%) and Plantation (+0.81%) bucked the trend, while Telecommunications and Media (-0.92%) and Technology (-0.79%) led the laggards.

Global Markets: The Dow Jones added 0.28% to 54,036.93, marking a second straight week of gains, while the S&P 500 rose 0.62% to a record close of 7,757.64 on Friday, the Nasdaq climbed 1.3% to 26,690.62. The rally followed a surprisingly weak July jobs report, which showed a loss of 23,000 jobs against expectations of an 83,000 gain, leading traders to sharply scale back September rate hike expectations. Chip and software stocks led the gains, with Atlassian surging 35% and Airbnb up 17% on strong earnings, while oil prices edged higher as markets awaited a potential US-Iran deal to reopen the Strait of Hormuz. Meanwhile, Europe's STOXX 600 advanced 0.31% to close at 660.25, reflecting a broadly positive tone across the region. In Asia, with Japan's Nikkei 225 slipping 0.12% and South Korea's KOSPI declining 0.60%, while Hong Kong's Hang Seng bucked the softer regional trend to rise 0.54% (CNBC).

Market Outlook. The weak July jobs report has eased near-term Fed policy concerns, increasing the likelihood of rates being held steady in September and keeping overall risk appetite relatively constructive. The rebound in chip and software stocks also suggests that concerns over AI-related overcapacity may be stabilising, although a further deterioration in the labour market could increasingly raise concerns over economic growth rather than simply reinforce expectations for lower inflation. Meanwhile, escalating Iran-U.S. tensions over the Strait of Hormuz remain a key overhang, with Tehran denying direct talks despite Washington’s earlier claims that a deal was nearing. The weekend drone strike on Saudi Aramco’s Jazan refinery by Iran-backed Houthis further highlights regional supply risks. With the 60-day window for the U.S.-Iran interim deal set to expire within days and key demands still unresolved, volatility in oil and risk assets is likely to remain elevated. Against this backdrop, we expect the KLCI to maintain a cautious-to-negative bias, with heightened geopolitical uncertainty likely to weigh on regional risk appetite, particularly across import-reliant and transport-linked sectors facing potential cost pressures. 

Sector focus. Utilities and Plantation counters may extend their gains, supported by continued defensive rotation and firm CPO prices respectively. Telecommunications & Media and Technology could remain under pressure following Friday's weak showing, with sentiment in chip and telco-linked names still fragile after the recent pullback.

Technical Commentary: Since peaking in January, the FBM KLCI has remained within a downward-sloping channel. While the index rebounded strongly from its 1 July low, the rally stalled near the channel's upper resistance. Thursday's pullback also formed a Dark Cloud Cover candlestick, signalling renewed bearish pressure. We therefore expect the index to trade weaker in the week ahead. 1,735 is the immediate support, followed by 1,700 should profit-taking emerge. Meanwhile, the 1,760–1,770 resistance zone is the stiff resistance. 

Company News 

Stratus Global Holdings Bhd saw its shares rise as high as RM2.99, a 30% increase from Thursday, as investors ride expectations on strong earnings from AI-linked stocks. (The Edge)

Paradigm Real Estate Investment Trust saw its net property income rise by more than four times to RM40.36 million in its 2QFY2026 from R9.26 million. (The Edge)

Nuenergy Holdings Bhd secured a RM44.5 million contract with a China-based construction and engineering company to undertake mechanical, electrical and plumbing works for a Johor data centre landing station, the company’s largest high-voltage project yet. (The Edge)

LYC Healthcare Bhd shares will be suspended from Monday, Aug 10, due to the company not being able to submit its overdue annual report for the financial year ended March 31, 2026. (The Edge)

EXSIM Hospitality Bhd secured an 80/20 revenue-sharing scheme for 395 serviced apartment units at The Stallionz @ Ipoh White Times Square. Under this scheme, EXSIM will gain 20% of the net rental revenue with the unit owner. (The Edge)

Avaland Bhd celebrated its Amika Residences projects selling all of its units ahead of its construction schedule. (The Edge)

Malaysian Market Review. The FBM KLCI fell 0.63% to 1,737.15 on Thursday, snapping its six-session winning streak as profit-taking set in after the recent rally lost momentum. Market breadth turned negative, with decliners outpacing advancers 577 to 567. Construction (+1.58%) and Technology (+1.35%) bucked the trend, while Industrial Products (-1.29%), Telecommunications (-0.83%) and Consumer (-0.80%) led the laggards.

Global Markets: U.S. equities slipped on Thursday as rising Treasury yields and a mixed batch of earnings weighed on sentiment: the Dow Jones fell 0.85% to 53,885.10, snapping its own record-breaking win streak, while the S&P 500 eased 0.18% to 7,709.96 and the Nasdaq Composite dipped 0.06% to 26,348.35, dragged by a roughly 20% plunge in AppLovin and a 13% drop in Western Digital on disappointing guidance. In Europe, the STOXX Europe 600 bucked the regional weakness, adding 0.16% to a fresh record near 658.19, supported by strong corporate earnings including Deutsche Telekom and a rebound in AI-infrastructure names such as ASML. In Asian markets, South Korea's Kospi tumbled 4.58% to 6,296.38 on heavy selling in large-cap semiconductor names, Japan's Nikkei 225 fell 0.93% to 65,683.26, and Hong Kong's Hang Seng dropped 1.49% to 25,530.28, while China's Shanghai Composite bucked the trend, adding 0.57% to 3,900.35. (CNBC).

Market Outlook. We expect the FBM KLCI to trade cautiously on Friday as investors digest the recent tech-led pullback across regional markets while positioning ahead of the closely watched U.S. non-farm payrolls report later tonight. Market sentiment may also remain fragile following Iran's publication of a draft proposal to bar U.S. and Israeli vessels from transiting the Strait of Hormuz, which lifted oil prices sharply on Thursday. Although Washington has rejected the proposed restrictions, the development has renewed geopolitical uncertainty at a time when markets had been anticipating a broader agreement as early as this week.

Sector focus. Technology and semiconductor-linked counters bear close watching after the sharp reversal in regional peers, which could weigh on sentiment locally after several sessions of outperformance. Financial Services and Plantation counters may see continued profit-taking following Thursday's declines. Construction remains a relative bright spot, supported by continued data centre and infrastructure contract flow.

Technical Commentary: Despite Thursday's pullback, the FBM KLCI remains above its EMA9, EMA20, EMA120 and SMA200, indicating that the broader upward structure remains intact. The index briefly dipped below the 1,735 resistance-turned-support level intraday before recovering to close above it, keeping the 1,760–1,770 resistance zone within reach. Meanwhile, 1,700 is the psychological support, followed by 1,680 should profit-taking emerge.

Company News 

A joint venture between Malaysian Resources Corp Bhd and Theta Edge Bhd has secured the RM3.028 billion system turnkey contract for the Pulau Pinang Mutiara Line Light Rail Transit (LRT) project from Malaysia Rapid Transit Corp Sdn Bhd. (The Edge)

Bolts and nuts manufacturer Tong Herr Resources Bhd has received a proposal from its major shareholders Allrich Corp and Richard Holdings Ltd — controlled by members of the Taiwanese Tsai family — to privatise the company through a selective capital reduction and repayment exercise (SCR) at RM2.55 per share. (The Edge)

Batu Kawan Bhd announced that its wholly owned subsidiary Whitmore Holdings Sdn Bhd’s voluntary takeover offer of MKH Bhd has become unconditional after the former’s shareholders approved the proposed acquisition at the group's extraordinary general meeting on Aug 5. (The Edge)

Pentamaster Corp Bhd saw its second-quarter (2Q2026) net profit jump by 63.9%, driven by its factory automation solutions segment, supported by its existing order book and sustained demand from its AI Compute and medical segments. (The Edge)

Oriental Kopi Holdings Bhd is planning to expand into Indonesia and Mauritius. (The Edge)

Sentral REIT’s net property income (NPI) for the second quarter ended June 30, 2026 (2QFY2026) slipped 3.2% year-on-year (y-o-y) to RM35.78 million, as operating expenses rose faster than rentals (The Edge)

Lotte Chemical Titan Holding Bhd saw its net losses double in its 2QFY2026 to RM401.67 million from RM189.33 million. (The Edge)

CBH Engineering Holding Bhd secured a RM26.2 million contract to upgrade a substation in Selangor. (The Edge)

Southern Score Builders Bhd said its 51%-owned unit has secured a RM146.53 million electrical package subcontract for a data centre project. (The Edge)

Carlo Rino Group Bhd has shelved its plan to transfer to Bursa Malaysia's Main Market, citing the prevailing operating environment and its strategic priorities. (The Edge)

Perak Transit Bhd on Thursday unveiled a share buy-back scheme, saying that investors undervalue the bus-and-terminal operator. (The Edge)

Handal Energy Bhd has delayed the release of its annual report for the financial period ended Dec 31, 2025 yet again, pushing back its previously stated Aug 7 target. (The Edge)

Malaysian Market Review. The FBM KLCI rose 0.90% to 1,748.17 on Wednesday, extending its winning streak to a sixth straight session as easing Middle East tensions and falling oil prices lifted regional risk sentiment. Market breadth was firmly positive, with advancers leading decliners 690 to 487. Construction (+2.42%), Utilities (+2.29%) and Technology (+1.81) led sectoral gains, while Healthcare (-1.76%) lagged.

Global Markets: U.S. equities were mixed overnight as a reported Houthi strike on a Saudi tanker pushed oil higher. The Dow Jones added 0.49% to a fresh record 54,349.12, while the S&P 500 slipped 0.17% to 7,723.55 and the Nasdaq Composite fell 0.83% to 26,363.44, retreating from Tuesday's records as SpaceX and AMD both sold off despite earnings beats. In Europe, the STOXX Europe 600 edged up 0.04% to 657.14. Asian markets surged on a broad semiconductor rebound tracking a 6% overnight jump in the Philadelphia Semiconductor Index, with South Korea's Kospi advancing 3.76% to 6,598.26 led by SK Hynix and Samsung Electronics, and Japan's Nikkei 225 surging 3.66% to 66,300.44 on the same chip strength plus a standout SoftBank earnings-driven rally. (CNBC).

Market Outlook. We expect the FBM KLCI to keep its positive momentum on Thursday, with the index likely to test the 1,760–1,770 resistance zone after breaking decisively above 1,735. Regional sentiment remains constructive following Wednesday's broad-based Asian semiconductor rally, though a reported Houthi attack on a Saudi oil tanker has interrupted oil's recent decline and could keep prices choppy in the days ahead. Meanwhile, Investors will also focus on the upcoming U.S. July non-farm payrolls for fresh signals on the Federal Reserve's policy outlook. Barring any significant deterioration in geopolitical conditions, we expect the local market to maintain its positive momentum.

Sector focus. Technology and semiconductor-linked counters should stay in focus this week, tracking the overnight rebound in regional chip names. Energy counters bear watching too, as a reported Houthi attack on a Saudi tanker has added fresh volatility to crude after its recent decline. Construction and Utilities could see continued rotation from domestically-driven investors amid the broader market's upward bias.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI closed at 1,748.17 on Wednesday, holding above its EMA9, EMA20, EMA120 and SMA200, with near-term bullish momentum firmly intact after a sixth consecutive day of gains. The index has decisively broken above the prior 1,735 resistance level, opening the door to the 1,760–1,770 resistance zone as the next test for buying interest. On the downside, the 1,735 resistance-turned-support now serves as the immediate support, followed by 1,700 should profit-taking emerge.

Company News

Gamuda Berhad has secured a RM1.71 billion contract to build a hyperscale data centre in Port Dickson, Negeri Sembilan. (The Edge)

Heineken Malaysia Bhd’s net profit for the second quarter ended June 30, 2026 (2QFY2026) fell 39% year-on-year (y-o-y) to RM50.53 million — its weakest quarterly performance in nearly five years. (The Edge)

Frontken Corp Bhd’s net profit for 2QFY2026 rose 43% y-o-y to a record-high RM47.72 million, thanks to stronger demand from oil and gas and semiconductor clients. (The Edge)

Kelington Group Bhd plans to invest about RM120 million to build an air separation plant in Maharashtra, India, as it expands its industrial gas business. (The Edge)

Nestcon Bhd’s wholly owned subsidiary, Nestcon Builders Sdn Bhd, secured a RM243 million contract with Exsim Waterfront Sdn Bhd to construct one block of serviced apartments in George Town, Penang. (The Edge)

Sarawak Consolidated Industries Bhd secured a RM24.59 million subcontract to undertake the reconstruction of a dilapidated school building in Sabah. (The Edge)

Malaysian Market Review. The FBM KLCI rose 0.40% to close at its intraday high of 1,732.66 on Tuesday, extending its winning streak to a fifth straight session as gains in technology and semiconductor counters, alongside broadly positive regional sentiment, lifted the benchmark. Market breadth was positive, with 621 advancers outpacing 482 decliners. Sector gains were led by Healthcare (+2.00%) and Technology (+1.02%), while REIT was the worst-performing sector, declining 1.04%.

Global Markets: US equities rallied to fresh records on Tuesday, with the S&P 500 climbing +1.79% to 7,736.52 and the Dow Jones adding +1.71% to 54,085.88, both closing at all-time highs, while the Nasdaq Composite surged +2.59% to 26,584.99 on robust second-quarter earnings and easing hopes for a reopening of the Strait of Hormuz. In Europe, the STOXX 600 rose +0.73% to 656.86, tracking the Wall Street lead and a rebound in oil prices. In Asia, South Korea's Kospi jumped +1.62% to 6,358.95, rebounding from an intraday drop after early weakness in Samsung Electronics and SK Hynix on competitive concerns from China's CXMT, as gains broadened into defense, shipbuilding and battery counters through the afternoon, while Japan's Nikkei 225 added +0.32% to 63,957.53. (CNBC).

Market Outlook. We expect the FBM KLCI to extend Tuesday's gains, underpinned by record closes on Wall Street and broadly positive regional market sentiment. Meanwhile, Brent crude tumbled more than 5% overnight to around US$79 per barrel following renewed optimism over U.S.-Iran negotiations and a potential reopening of the Strait of Hormuz, easing near-term supply concerns despite lingering geopolitical uncertainties. Investors will also focus on the upcoming U.S. ISM Services PMI and July non-farm payrolls for fresh signals on the Federal Reserve's policy outlook. Barring any significant deterioration in geopolitical conditions, we expect the local market to maintain its positive momentum.

Sector focus. We expect the Technology sector to remain in focus this week amid mixed regional semiconductor performance, while Energy and transport-related counters may benefit from lower crude oil prices following the easing of U.S.-Iran tensions. Financial Services could continue to draw support from improving market sentiment.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI closed at 1,732.66 on Tuesday, holding above its EMA9, EMA20, EMA120 and SMA200, indicating that the near-term bullish momentum remains intact and has strengthened following the session's gains. The index is now testing the 1,735 resistance level, with a decisive breakout above this level likely to reinforce buying interest and open the door to the 1,760–1,770 resistance zone. On the downside, 1,700 remains the immediate support, followed by 1,680 should profit-taking emerge.

Company News

MNRB Holdings Bhd is selling its takaful business, Takaful Ikhlas Family and Takaful Ikhlas General, to Bank Kerjasama Rakyat Malaysia Bhd (Bank Rakyat) for RM1.64 billion cash. (The Edge)

Hartalega Holdings Bhd’s net profit for the first quarter ended June 30, 2026 (1QFY2027) rose six-fold year-on-year (y-o-y) to RM70.03 million, its highest quarterly earnings in four years. (The Edge)

Vantris Energy Bhd's units have secured RM830 million work orders from Petroliam Nasional Bhd’s (PETRONAS) upstream arm to provide transportation, installation and tender-assisted drilling rig services in Malaysia. (The Edge)

Capital A Bhd's non-aviation businesses posted mixed operating performance in the second quarter. (The Edge)

K-One Technology Bhd is disposing of its cloud business arm G-AsiaPacific Sdn Bhd to Tokyo listed ITOCHU Corp and its Singapore unit ITOCHU Singapore Pte Ltd for RM94 million. (The Edge)

SNS Network Technology Bhd said it expects to recognise revenue from its US$298.66 million (RM1.22 billion) contract for the supply of high-performance artificial intelligence (AI) servers to a Singapore-based customer in its current fiscal year. (The Edge)

GFM Services Bhd has secured an additional RM83.1 million for major turnaround works at the Pengerang Integrated Complex (PIC) in Johor (The Edge)