PETALING JAYA: As the broader market navigated a year marked by shifting interest-rate expectations, currency volatility, and policy resets, performances on Bursa Malaysia were far from uniform.
Selected sectoral indices – such as plantation, financial services and real estate investment trusts (REITs) – emerged as outperformers amid a challenging macroeconomic backdrop.
On a year-to-date (y-t-d) basis, the plantation index grew 9.06% while finance and REITs rose 3.11% and 16.86%, respectively.
These performances indicate not only a near-term cyclical advantage but also investor confidence and conviction.
The question is whether these indices can continue their strong performance heading into 2026.
MBSB Research senior analyst Royce Tan said sectors that have been seen growing momentum since the third quarter of the year (3Q25) include plantation, finance and consumer.
“We opine that the finance and consumer sectors could see this momentum continue in 2026. As of Monday, we observed that the only sectors in the positive territory y-t-d are REITs, plantation and finance.
“Most of the weakness was in the 1Q25, when US President Donald Trump’s second presidency brought renewed uncertainties,” he told StarBiz.
In contrast, the technology sector fell 13.56% this year, but Tan expects artificial intelligence (AI)-driven investments to maintain their pace in 2026.
“AI-related capital expenditure may be entering a supercycle as projections by experts are pointing towards north of US$400bil in terms of global infra spending in 2025, potentially reaching US$500bil in 2026,” he explained.
With this, the construction sector is expected to continue benefitting as projects like data centres enter their second growth phase.
“Accordingly, the energy and utilities sectors, and the renewable energy (RE) sub-sector, should be beneficiaries as AI-driven data centres are pushing global power demand up 20% annually, creating equity opportunities in utilities and grid modernisation.
“This is particularly true within the RE sub-sector, as hyperscalers and operators increasingly prioritise clean, long-term power procurement and energy storage solutions to meet sustainability commitments and manage power constraints,” Tan noted.
Former senior investment banker, Ian Yoong Kah Yin reckons the financial sector should continue to excel in 2026.
This is expected to keep the FBM KLCI steady, as banks make up about 42% of the index – the largest sector by weightage.
He added that the potential listing of TNG Digital Sdn Bhd, in which CIMB Group Holdings Bhd
holds a 45% stake, would further strengthen the financial sector.
Yong also noted that the plantation sector remains a top performer, with crude palm oil prices trading between RM3,900 and RM4,100.
According to him, the FBM KLCI could test 1,850 points in 2026, above Maybank Investment Bank Bhd’s (Maybank IB) estimate of 1,730 points.
“Our economy is strong and Bursa Malaysia has been lagging many equity markets globally, which in my view is unjustified,” he opined.
Maybank IB’s bottom-up analysis suggests the FBM KLCI could reach 1,780 points, driven primarily by large-cap banks.
“By sector weight, we have upgraded banks to ‘positive’ from ‘neutral’,” the report stated, adding that its top picks include CIMB.
Rakuten Trade head of equity sales Vincent Lau also weighed in, saying bank earnings have remained resilient, supported by manageable non-performing loans.
“Overall, the economic activity barometer was positive, while dividend yields were also quite good.
“The construction sector is finally seeing a recovery in orders after long bouts of lagging. They should continue to do well in 2026,” he said.
Lau was also hopeful that after seeing a record-high of some RM21bil in foreign fund outflows and muted retail participation, conditions would improve in 2026.
“A stronger ringgit, economic reforms that have been done, and the foreign direct investments that our Prime Minister Datuk Seri Anwar Ibrahim has secured through his global tours will yield positive effects,” he noted.
The large foreign outflows have not dampened Yoong’s spirits.
He noted that the FBM KLCI is at its highest level since December 2020, notwithstanding foreign investors being net sellers of Malaysian equities in the 4Q25 and for the year as a whole.
“Domestic institutional and retail investor sentiment in Malaysian equities is at a low.
“This, to my mind, is a big positive for contrarian investors,” he said.
Meanwhile, on key themes for 2026, Tan believes Visit Malaysia 2026 (VM2026) will play a key role in supporting the economy and equity market.
“Malaysia’s tourism sector has become a key economic driver, contributing 15.1% to gross domestic product in 2024 and generating RM102.2bil in receipts, surpassing pre-pandemic levels.
“This growth was supported by strong inbound and domestic tourism, improved connectivity, and targeted campaigns.
“We expect sectors such as transportation, hospitality, healthcare and consumer to benefit from this,” he said.
Yoong said VM2026 would be a major driving force next year.
“As it is, Malaysia is currently the most visited country in South-East Asia, overtaking Thailand, which held the crown for about a decade. This will be reflected in the Bursa Consumer Products and Services Index,” he said.
According to MBSB Research, domestic catalysts like the 13th Malaysia Plan, VM2026 and Budget 2026 would help strengthen jobs, wages and tourism receipts.
