PETALING JAYA: Markets may already have priced in the worst immediate fears from the ongoing energy crisis, but broader investment risks are not going away, says Affin Hwang Research.
Post-Affin Market Outlook 2026 conference, the research house said key takeaways from the panel sessions indicate that investment risks are “here to stay”.
A bigger concern would be the secondary and tertiary effects on fuel-to-food supply disruptions and the inflationary impact, which have yet to be reflected in financial markets.
Despite the challenges, Affin Hwang Research retains its positive outlook for Malaysia and has reiterated an “overweight” call on the equity market.
It also expects the benchmark FBM KLCI to hit 1,830 points by year-end.
“Malaysia and Singapore are relatively safe havens amid the global market volatility due to political and financial stability.
“Sarawak and Sabah can play a bigger role in driving Malaysia’s growth with more autonomy in education, healthcare, development expenditure, energy and immigration policies.
“Rich natural resources such as vast gas reserves in Sarawak and oil reserves and untapped solar power generation opportunities in Sabah can bolster Asean’s energy security and growth,” it said in a note.
“Asean Petroleum Security Agreement needs to be ratified to improve the region’s energy security by establishing energy stockpiles and regional energy interconnections and diversification of energy sources.”
The conference, titled as Propelling Malaysia Forward, attracted about 370 participants that included government authorities, corporate leaders, institutional and high-net-worth investors.
Affin Bank president and group chief executive officer Datuk Wan Razly Abdullah, in his opening remarks, highlighted that the global economy has entered a new phase of structural change.
He said geopolitical tensions, energy shocks and rapid technological disruption are reshaping how capital is deployed and how markets operate.
“Malaysia’s outlook remains relatively constructive, and we reiterate our real gross domestic product growth of 4.8%, inflation of 1.7% and exchange rate of RM3.80 per US dollar for 2026.”
Affin Hwang Research said Deputy Finance Minister Liew Chin Tong highlighted in his keynote address that the global economy faces a perfect storm amidst geopolitical risks of the Middle East conflict and the ongoing US trade war with other countries.
“We are moving away from a unipolar world dominated by the United States to a multipolar world, and Malaysia is uniquely positioned to benefit as a neutral country focusing on rule-based trade and attracting investments,” Affin Hwang Research wrote.
“Malaysia is entering the energy crisis in a position of strength as a net energy and commodities exporter.”
“But structural reforms should continue to reduce fuel consumption and ‘Build back better’ with investments to improve public transport efficiency, promoting urban living and developing more resilient supply chains.”
It also quoted Liew as saying that the Finance Ministry is exploring ways to create a pathway for more semiconductor-related companies, both foreign direct investment-linked and local firms, to be listed on Bursa Malaysia.
This will create a circularity of investments to build a stronger economy and market, especially amid an artificial intelligence boom.
Liew noted that Malaysia’s Budi95 mechanism for RON95 petrol subsidy has become a crucial demand management tool.
The mechanism allows the government to closely monitor national fuel consumption patterns and gradually implement reforms without causing widespread public hardship.
“Data gathered from the mechanism indicate that 80% of Malaysians use less than 200 litres of RON95 petrol, 60% use less than 150 litres and 50% use less than 100 litres,” said Liew.
