Maybank IB: Malaysia's economy to stay resilient in 2H25
Its chief economist Suhaimi Ilias said Malaysia is on track to achieve a lower budget deficit of 3.8 per cent of gross domestic product this year, following a better-than-expected 4.1 per cent in 2024 compared to the official target of 4.3 per cent.
"The numbers so far are encouraging. Obviously, after things like the Sales and Service Tax measures effective July 1, I guess eyes are on these targeted RON95 petrol subsidy rationalisation," he said during the virtual media briefing on the 2H25 market outlook.
On equities, Maybank IB has retained its FBM KLCI year-end target at 1,660, anchored by improving forward earnings and several key investment themes.
Its head of equity research Lim Sue Lin said five core themes continue to drive the bank's strategy on external disruption, domestic consumption, state-driven development, investment realisation, and corporate restructuring.
"As for the top stock picks, it includes Tenaga Nasional Bhd, YTL Power International Bhd, Gamuda Bhd, Public Bank Bhd, KPJ Healthcare, Farm Fresh Bhd and Solarvest Holdings Bhd, with YTL Power and Gamuda being the leading data centre plays," she said.
She added that although the broader market remained range-bound due to a lack of immediate catalysts, rising activity in infrastructure, renewable energy, and data centres had strengthened the firm's conviction in those segments.
"Maybank IB maintained a 'Neutral' stance on banks due to margin compression and slower loan growth expectations following the latest Overnight Policy Rate cut.
"Still, we forecast FBM KLCI earnings to grow 2.5 per cent in 2025 and 7.7 per cent in 2026, with a rebound anticipated in the banking sector next year," Lim added.
Meanwhile, Maybank IB head of FX research Saktiandi Supaat said the ringgit may strengthen slightly to 4.10 against the US dollar by end-2025.
"Local currency has been one of Asean top performers so far this year, appreciating by about 5.25 per cent year-to-date. Our view is that the ringgit is around its fair value. We also project the dollar-ringgit to strengthen towards 4.10 by the end of this year and move closer to 4.00 by mid-2026," said Saktiandi.
Looking ahead, the bank flagged several key upcoming policy milestones which the 13th Malaysia Plan mid-term review on July 31, the launch of the National Investment Incentive Framework, the unveiling of the Johor-Singapore Special Economic Zone (JS-SEZ) blueprint, and Budget 2026, which is expected to be tabled on October 10.
Despite the external uncertainties, Maybank IB remained cautiously optimistic about Malaysia's outlook for 2H25, citing continued reform momentum and a relatively resilient domestic backdrop.
"Of course, we need to keep monitoring the global situation, especially with the tariff uncertainties in the US. The risk is if this escalates further, we may see more volatility in global trade flows again.
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