Analysts Predict Temporary Weakness in Malaysian Stock Market Amid Geopolitical Risks

According to Jin10, analysts Jeremy Goh and Felicia Ling from Hong Leong Investment Bank have reported that the Malaysian stock market may experience temporary weakness over the next two quarters. This is attributed to rising geopolitical risks, a weakening Malaysian ringgit, and the U.S. Federal Reserve's delay in interest rate cuts, which has led to a narrowing interest rate differential. Despite these challenges, the earnings performance of the FTSE Bursa Malaysia KLCI appears largely unaffected by the initial stages of the Iran conflict. Sectors such as banking, utilities, healthcare, and telecommunications have shown strong defensive characteristics. Among the index constituents, the plantation sector, Petronas Chemicals, and QL Resources are expected to receive positive boosts, while the construction, consumer goods, and Petronas Dagangan sectors may face headwinds. The analysts anticipate that the market will regain momentum later this year, viewing the current levels as an ideal buying opportunity. Hong Leong Investment Bank maintains a target of 1,790 points for the KLCI by the end of 2026, with top stock picks including CIMB Group, Tenaga Nasional, and IHH Healthcare.