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Local
KLCI Braces for Higher-for-Longer Rates
Thu, 17-Sep-2026 07:36 am
by Research Team • Apex Research

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)

Sentiment: Neutral
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