CGSI Research said the country’s fiscal position could surprise on the upside, supported by stronger economic growth.
PETALING JAYA: CGS International Research (CGSI Research) remains positive about the prospects for Malaysia’s economy and equity market, citing improving macro fundamentals, resilient consumer spending and policy stability.
The research house said this during its its Malaysia Corporate Day 2026 event earlier this month.
In a note outlining key takeaways from the event, which was attended by more than 400 participants, CGSI Research said the country’s fiscal position could surprise on the upside, supported by stronger economic growth.
According to the research house, Treasury secretary-general Datuk Johan Mahmood Merican, who spoke at the conference, said the government’s fiscal deficit for last year could come in better than the projected 3.8%, thanks to stronger-than-expected growth in gross domestic product.
Earlier this week, Prime Minister Datuk Seri Anwar Ibrahim said Malaysia’s economy grew 4.9% last year, surpassing official projections of between 4% and 4.8%.
On the consumption front, CGSI Research highlighted comments from Malaysia’s largest money services business operator, Merchantrade Asia Sdn Bhd, which said a strengthening ringgit has boosted disposable incomes for Malaysia’s 3.4 million migrant workers.
Chief executive officer Ivan Alias noted that most migrant workers send a fixed amount of money home to their families, benefiting from the stronger ringgit.
“With 85% of CGSI Research’s Malaysia coverage being domestically focused, this is an added positive, particularly for consumer-related businesses,” the research house said.
Retail activity also showed continued momentum, CGSI Research said.
Low Ngai Yuen, managing director of AEON360 Sdn Bhd, said that AEON’s retail sales rose 7% in the fourth quarter of last year, driven by a 6% increase in volumes.
AEON360 is a 51:49 joint venture between Aeon Credit Service (M) Bhd
and Aeon Co (M) Bhd established to unify AEON Group’s ecosystem in Malaysia.
CGSI Research attributed this partly to the rollout of the government’s Sumbangan Asas Rahmah (Sara) cash assistance programme, which began in September last year.
“With another round of salary hikes for civil servants this month, the second round of Sara handouts to begin on Feb 26, coupled with the double festive season of Chinese New Year in mid-February and Hari Raya Aidilfitri in mid-March, the first quarter of this year should provide further buoyancy for retail sales,” the research house said.
From a market perspective, CGSI Research highlighted the Bursa Malaysia Quality 50 (BMQ50) Index, launched on Jan 12, as an avenue to broaden investor participation, particularly in quality small and mid-cap stocks.
The BMQ50 and its syariah-compliant counterpart, the Bursa Malaysia Quality 50 Shariah Index (BMQS), comprises 50 companies outside the FBM KLCI, including 20 firms with market capitalisations of between RM270mil and RM1bil.
CGSI Research noted that BMQ50 companies delivered return on equity (ROE) of 27.7% in 2024, while the BMQS recorded ROE of 20.3%, both outperforming the FBM KLCI’s ROE of 9.6%.
Overall, CGSI Research said its positive outlook for Malaysian equities is anchored on improving business activity as tariff-related uncertainties ease following the Asean Summit last September, buoyant consumer sentiment supported by government stimulus, policy stability and ongoing economic reforms, as well as a stronger ringgit supporting corporate earnings and valuations.
