KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
Malaysia’s upcoming Budget 2026 (to be tabled on Oct 10) is expected to mark a strategic shift — from post-pandemic recovery to long-term structural reform and fiscal consolidation.
While Budget 2025 emphasized tourism revival and domestic consumption, Budget 2026 aims to sustain growth, improve fiscal health, and accelerate green and digital transformation under the 13th Malaysia Plan (13MP).
Macroeconomic Outlook
Leading institutions UOB, OCBC, and CIMB Securities broadly agree that:
Fiscal deficit is likely to narrow to 3.4–3.6% of GDP, driven by improved tax compliance and the upcoming carbon tax.
Development expenditure will remain steady at around RM86 billion, aligned with infrastructure priorities.
GDP growth forecasts range between 3.8% (OCBC) and 5.5% (UOB).
Inflation is projected to ease, allowing BNM to maintain a neutral stance, with room for a mild cut if growth moderates in early 2026.
Key Budget Themes
1. Subsidy Rationalisation with Social Protection
The government is expected to finalise targeted RON95 petrol subsidies, following the successful diesel rationalisation in 2024.
Targeted aid for RON95, rice, and cooking oil will continue, while cash handouts remain central to cushioning inflationary impacts.
2. Tax and Compliance Enhancement
No new broad-based taxes are anticipated, but focus will shift to:
Carbon tax on high-emission industries (steel, energy).
“Sin tax” adjustments for tobacco, alcohol, and e-cigarettes.
E-invoicing rollout, enhancing transparency and compliance.
3. Infrastructure and Development Spend
Core public investments remain intact, supporting national connectivity and employment:
MRT3, Penang LRT, Sabah Pan-Borneo Highway, and hospital expansions.
Stable allocation to anchor 13MP implementation and private investment spillovers.
4. Structural Reform Agenda
As the first budget under the 13MP, reforms will target:
Progressive wage expansion and foreign worker levy reform (MTLM).
Governance and transparency laws to strengthen public sector efficiency.
Refreshed investment incentive frameworks to attract high-value industries.
Sectoral Winners
Construction & Infrastructure
Continued focus on transportation and public projects will sustain orderbook momentum for contractors.
Top Picks: $YTL (4677.MY)$, $GAMUDA (5398.MY)$, $IJM (3336.MY)$, $SUNWAY (5211.MY)$, $EDGENTA (1368.MY)$
Renewable Energy & Green Tech
The introduction of a carbon tax and stronger energy transition roadmap will accelerate green investments.
Top Picks: $TENAGA (5347.MY)$, $YTLPOWR (6742.MY)$, $YINSON (7293.MY)$, $ECOWLD (8206.MY)$, $SLVEST (0215.MY)$
Technology & Digital Economy
E-invoicing, automation incentives, and high-tech manufacturing grants will drive digital adoption and export competitiveness.
Top Picks: $INARI (0166.MY)$, $VITROX (0097.MY)$, $MPI (3867.MY)$, $GHLSYS (0021.MY)$, $GREATEC (0208.MY)$
Consumer & Retail
Subsidy restructuring balanced by cash aid should protect household consumption, supporting food & beverage and retail sectors.
Top Picks: $NESTLE (4707.MY)$, $CARLSBG (2836.MY)$, $F&N (3689.MY)$, $SEM (5250.MY)$, $PADINI (7052.MY)$
Investor Takeaway
Budget 2026 will likely prioritise fiscal prudence and sustainability over short-term stimulus.
While construction and green sectors are positioned for steady growth, consumer-linked counters remain resilient through social aid continuity.
Investors should watch for policy incentives in renewables, tech digitisation, and infrastructure modernisation as key alpha drivers into 2026.
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