PETALING JAYA: Despite heightened geopolitical risks and volatile oil prices, analysts are growing more upbeat on Malaysian equities, pushing the consensus target for the FBM KLCI higher to 1,948 points from 1,905 just weeks ago.
As a result, MBSB Research said the spread between FBM KLCI consensus bottom-up target and its price has widened from 188 points to 252 points during the corresponding period.
“Of the 30 constituents in the FBM KLCI, more than two thirds, or 21 companies, had seen higher consensus target prices (TP) since March this year. Meanwhile, only eight companies have their TP lowered and one company with an unchanged TP,” the research firm said in a report.
Petronas Chemicals Group Bhd
saw the largest percentage rise in TP at 89% (or from RM3.08 to RM5.82) as it is seen as a major beneficiary of favourable feedstock and higher petrochemicals product prices.
Other TP gainers were commodity-related companies as well as banking, healthcare and utilities stocks.
According to MBSB Research, the equity TP optimism amid external uncertainties was “duly supported by Malaysia’s still robust macro performance”. Based on the advance estimate, Malaysia’s gross domestic product (GDP) grew by 5.3% year-on-year (y-o-y) in the first quarter of 2026 (1Q26).
While this was below the 5.5% consensus forecast and moderating from 4Q25’s 6.3%, reflecting softer manufacturing and services activity, the research firm said the growth was seen as a “respectable pace” given external risks, particularly the conflict in the Middle East.
“Moreover, the pace of growth exceeded our expectation of 4.8% y-o-y and was broad-based, with positive performance across most major industries despite global geopolitical conflicts and rising crude oil prices,” it added.
Elaborating, it said the situation is in a fragile de-escalation phase where conflict risks have stabilised, but underlying disruptions and uncertainties remain.
The research firm said valuations for local equities are likely to stay subdued, with the FBM KLCI seen trading below 16 times price-to-earnings (PER) amid lingering geopolitical risks and the broader economic fallout.
As such it maintained its baseline 2026 target for the FBM KLCI at 1,800 points, implying a forward PER of 15.8 times.
A dealer said market sentiment is expected to see volatile sessions ahead as oil prices regain strength amid renewed US-Iran tensions in the Strait of Hormuz.
He noted that the benchmark index had moved above the 1,700 level, supported by sustained buying in large-cap stocks.
However, he cautions that equity markets are likely to remain jittery as investors track developments around the Middle East ceasefire and any disruption risks to energy flows.
According to reports, US President Donald Trump signalled he is unlikely to extend the April 22 ceasefire, heightening pressure for a last-minute deal.
The dealer expects the 1,700 level to remain a key resistance level in the near term, with upside likely capped as investors assess the impact of the renewed blockade of the Strait of Hormuz.
Defensive sectors such as utilities and telecommunications provide a buffer against volatility in the event of an unexpected breakdown in talks.
