PETALING JAYA: Despite the surge in geopolitical tensions in the Middle East and the sharp spike in oil prices, Malaysia’s equity market outlook remains constructive.
Investors are becoming more cautious and shifting towards safer sectors.
Even so, domestic-focused industries and dividend stocks are expected to remain resilient in the near term.
In a recent strategy note, Maybank Investment Bank Research (Maybank IB) reiterated its positive stance on Malaysian equities while recommending a more defensive positioning until geopolitical risks ease.
“While we have updated our top picks list, the ongoing geopolitical tensions that have impacted global equity markets, including Malaysia, suggest that adopting a more defensive strategy until the conflicts subside would be a prudent approach,” the research house said.
“We remain bullish on Malaysian equities and stay focused on domestic-centric sectors and stocks, led by banks, consumer, construction, healthcare and renewable energy,” it added.
Maybank IB’s latest “Top Top Picks” list highlighted three counters – RHB Bank
Bhd, SD Guthrie Bhd (SDG) and IHH Healthcare Bhd (IHH) – based on technical resilience and sector momentum.
It maintained its 2026 year-end FBM KLCI target at 1,780 points, equivalent to about 15.5 times estimated 2027 earnings, with a bull-case scenario of 1,890 points should sentiment improve.
“Key risk to our market call lies in geopolitics, especially in the twist of events in the Middle East conflict, which could decelerate global growth and Malaysia’s gross domestic product,” said Maybank IB.
Its bear case FBM KLCI stood at 1,550, or 14 times estimated 2027 earnings, with corporate growth halved from its current forecast.
Amid the current market turmoil, Maybank IB said there are still opportunities in defensive dividend plays and commodity-linked stocks that could benefit from higher oil and plantation prices.
On the banking front, the research house noted that share prices across the FTSE Bursa Malaysia KLCI banking constituents have corrected sharply, but RHB Bank appeared the most technically resilient.
“We believe RHB Bank presents the best technical setup, as it has been the most resilient and all of its moving average lines remain upward sloping,” it said.
The plantation sector also stands out as a strong performer.
According to the research house, the industry ranks as the fourth best-performing sector in 2026 year-to-date returns.
The rebound has been supported by gains in SDG, which lifted the broader plantation index even during recent market weakness.
Healthcare, meanwhile, offers potential rebound opportunities after a recent technical pullback.
Maybank IB notes that IHH recorded a sharp gap-down earlier this month, but technical indicators suggest a possible near-term recovery.
“IHH saw a sharp gap-down on March 9, but as it formed a hammer candlestick within its uptrend channel, a rebound could emerge in the near term,” it said.
Commodity-related counters may also see trading opportunities as geopolitical tensions push energy prices higher.
Maybank IB said disruptions to shipping routes and higher bunker costs could support freight rates and benefit Westports Holdings Bhd, while chemical producers such as Petronas Chemicals Group Bhd may gain from stronger product prices.
“The unusual surge in crude oil prices, alongside the continued strength in safe-haven assets such as gold and silver, suggests that investors globally have turned more defensive,” the research house added.
Moreover, any de-escalation in tensions could quickly restore risk appetite across equity markets.
Meanwhile, one analyst said the current market volatility provided investors the opportunity to “buy on weakness”.
However, he stressed that investors should focus on names with strong fundamentals and sustainable earnings growth, rather than chasing potential short-term rebounds.
“In this environment, sticking to stocks with solid balance sheets and clear business models is key – fundamentals will win out over market noise,” the analyst told StarBiz.
