KUALA LUMPUR: Rakuten Trade Sdn Bhd has raised its FTSE Bursa Malaysia KLCI (FBM KLCI) target to 1,650 from 1,630 for 2025, buoyed by renewed foreign fund inflows into Asia.
Head of research Kenny Yee said funds were likely to return to the region, supported by attractive valuations and steadier fundamentals.
"Sentiment is slowly improving and, with this influx of foreign funds returning to Asia, it will certainly boost sentiment and hype up the feel-good factor,” he told a virtual media briefing on the fourth-quarter 2025 Market Outlook.
Yee said US President Donald Trump’s policy was heightening global uncertainties, and the adverse effects were beginning to reverse into the United States, illustrated by weak job market data amid a softening US economy.
He said global investors were starting to look elsewhere, with Asia, particularly China and Hong Kong, emerging as preferred destinations.
"Nonetheless, we believe the Southeast Asia region may come into the spotlight once the party in China-Hong Kong dissipates.
"Going forward, we expect foreign funds to re-look at Malaysia once the party in China-Hong Kong fades.”
Yee said foreign shareholding could improve to between 25 per cent and 30 per cent, which would then significantly boost liquidity in the local bourse.
On the ringgit, he said it would undergo some recalibration and was expected to trade between 4.00 and 4.15 against the US dollar by end-2025, underpinned by a weakening US economy that could trigger more rate cuts.
Commenting on the anticipated visits of Trump and Chinese Premier Li Qiang next month during the ASEAN Summit, Yee said the summit could lift sentiment but its impact on the stock market would likely be limited.
"I think these are more to showcase the importance of ASEAN. So, certainly sentiment will improve, but that does not necessarily translate into higher stock market performances,” he added.
Rakuten Trade expects strong performance in banking, construction, consumer, telecommunications, power, utilities, and renewable energy in the fourth quarter. These sectors are rated as ‘overweight’ for the period.
Its top picks among blue chips are 99 Speed Mart Retail Holdings Bhd
, AMMB Holdings Bhd, Gamuda Bhd, RHB Bank Bhd, and Telekom Malaysia Bhd. - Bernama
