PETALING JAYA: The Malaysian market is expected to remain strong despite volatility arising from Trump’s policies relating to tariffs.
Maybank Investment Bank Research (Maybank IB) said the first quarter of financial year 2025 (1Q25) was turbulent due to this despite the region not being particularly a priority for Trump, nor a direct target.
“The announcement on sector specific tariffs today leaves everything fluid until then,” it noted.
In response to that, the Malaysian government is planning to tighten regulations on semiconductors, an important move to preserve Malaysia as a hub to attract investments.
On a positive note, the research house said the local market will be driven by domestic-centric policies especially from the consumer sector.
According to the research house, it expects firmer spending from various measures that were meant to boost spending overall like cash handouts to lower income families, a hike in salaries for civil servants and a minimum wage hike among others.
It added however, even with these measures, consumer companies have yet to feel the impact yet.
“Early signs of momentum pick in 1Q25 was expected given the festivities but we believe there will be more boost, with the full impact of civil servants’ salary hikes and minimum wage increases to be seen from 2Q25,” it noted.
The reserch house expected a neutral impact to the sector from the RON95 subsidy rationalisation from sufficient disposable income.
Maybank IB also said the state-driven activities like the Johor-Singapore Special Economic Zone (JS-SEZ) is set to have positive spillover effects into other sectors like property.
“The property sector remains catalytic to further developments of the JS-SEZ with Eco World Development Group Bhd
and YTL Power International Bhd (YTLP) as our picks for this theme,” it said.
Other projects that will boost other industries include the Rapid Transit System that is to be completed by end-2026.
“Moreover, Johor has been identified as a data centre hotspot and investment magnet for foreign investments, so we expect further spillover effects along the supply chain of these sectors would benefit the small and medium enterprises,” Maybank IB said.
It added committed investments will remain sound, particularly for data centres, as no significant halts have been noticed so far.
However, concerns over tariffs under the Trump administration has caused a downward spiral in names related to data centre plays, construction and to some extent, the property sector.
“We see this as an opportunity to accumulate investments in some of these names given robust fundamentals and outlook. Within this space, we stick to our buys for Gamuda Bhd and YTL Power,” it said.
As for companies and its restructuring, Maybank IB said despite not seeing much traction in 1Q25, there are plans to execute multiple restructurings through the year.
“The initial phase of the Gear-Up programme may not have an immediate direct impact on the capital markets but the related positive repercussions and uplifts will be more evident over time,” it said.
The research house noted approved and committed investments are unlikely to diverge in its view as more investment realisation takes form.
Maybank IB said Malaysia is at the start of an investment upcycle primed by domestic economic policies and initiatives.
“Trade diversion and diversification strategies remain a strategic priority for businesses.
“Government initiatives contained in the National Energy Transition Roadmap are still seeing traction with catalytic projects on track, while the New Industrial Master Plan and National Semiconductor Strategy should set the country on a long-term growth path,” it said.
Meanwhile, Maybank IB said there are still opportunities to accumulate stocks for the long-term, including banks.
“Our analysis suggests that if investors aim to outperform the market over 10 years, banks are the sector to invest in.
“Regardless of the economic cycle, we believe there are always buyers for the banks as the sector is deemed the proxy to the country’s macro performance whilst also being the largest and most liquid set of stocks in trade,” it noted.
Its top picks included Public Bank Bhd, AMMB Holdings Bhd and CIMB Group Holdings Bhd.
