KUALA LUMPUR, July 29 (Bernama) -- Bursa Malaysia rebounded to close higher on Wednesday on selective buying of defensive stocks after a volatile trading session. IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said consumer products and services stocks lifted the key index higher, overcoming lingering geopolitical concerns. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 3.08 points to 1,715.56 from yesterday’s close of 1,712.48. The benchmark index, which opened 1.91 points higher at 1,714.39, moved between 1,710.79 and 1,720.59 during the day’s trading. In the broader market, gainers outstripped decliners 550 to 476, while 612 counters were unchanged, 1,129 untraded, and 48 suspended. Turnover rose to 2.96 billion units valued at RM2.48 billion from 2.94 billion units valued at RM2.56 billion on Tuesday.
Investors eyeing the oil and gas (O&G) sector for bargains might want to pump the brakes. Kenanga Investment Bank warns it’s too early to bottom-fish, as earnings downgrades are likely ahead — especially for upstream service providers heading into FY2026.
Despite recent price dips across the board, the firm urges a wait-and-see approach until there’s more clarity on global energy dynamics and Petronas-related developments.
Weak Outlook for Upstream & Petrochemicals
Kenanga sees a sluggish stretch ahead for local upstream O&G players. Their concern? The lack of catalysts to drive Brent crude prices higher in the near term. Even geopolitical tensions aren’t pushing prices sustainably higher, unlike previous rallies sparked by shocks like the Arab Spring.
In parallel, the petrochemical segment continues to struggle, stuck in a prolonged downtrend with product prices stagnating around US$1,000/mt since Q4 2024. Kenanga sees no meaningful signs of a turnaround just yet.
Supply Pressure from OPEC+ Weighs on Prices
Adding to the headwinds is OPEC+’s move to gradually unwind production cuts. While 2 million barrels per day (bpd) have already returned to the market, another 3.85 million bpd of supply is expected to come back before the end of 2026 — pressuring prices further.
Kenanga maintains its neutral stance on the O&G sector with unchanged Brent crude forecasts of US$64 (2025) and US$67 (2026) per barrel.
Don’t Chase the Dip Yet
“Earnings will likely weaken further before stabilising,” the note cautioned. Investors are advised to stay patient and avoid premature entries.
Bright Spots: DIALOG & MISC
Amid the gloomy sector view, Kenanga still sees value in Dialog Group Bhd and MISC Bhd, citing their diversified income streams and resilient business models.
Bottom line: The worst might not be over for oil & gas. While long-term fundamentals could improve, near-term volatility, supply overhang, and weak prices mean it’s still too early to jump in.
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