KUALA LUMPUR, Jan 23 (Bernama) -- Bursa Malaysia’s benchmark index recouped earlier losses to settle higher, maintaining a more than six-year high, buoyed by continued buying interest in technology stocks, while the strengthening of the ringgit against the US dollar further lifted investor sentiment. At 2.27 pm today, the local currency strengthened to 3.9992 versus the greenback, its strongest level in more than seven years. It was last seen at this level on June 18, 2018, at 3.9960/9990. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 2.85 points or 0.17 per cent to 1,719.99 from yesterday’s close of 1,717.14. The index surpassed its previous peak of 1,719.00 recorded on Feb 26, 2019. The barometer index opened 1.30 points lower at 1,715.84 and moved between an intraday low of 1,711.89 in early trade and a high of 1,723.41 in late afternoon before slipping slightly toward the close. However, market breadth was negative with decl...
Market Overview
Malaysia is expected to keep its benchmark interest rate unchanged at its first policy meeting of the year, as strong economic growth and subdued inflation give policymakers room to remain patient amid rising global uncertainty.
According to a Bloomberg survey, all economists expect Bank Negara Malaysia to hold the overnight policy rate (OPR) at 2.75%, following a single 25-basis-point cut in July 2025.
Why BNM Can Afford to Hold
Malaysia’s economy ended 2025 on solid footing, outperforming earlier concerns around external shocks.
Key supports include:
Stronger-than-expected economic growth in the second half of 2025
Record-high exports last year, despite fears of US tariff-driven slowdowns
Inflation at a five-year low of 1.4%, well below the central bank’s comfort range
Together, these factors reduce the urgency for further policy easing.
External Risks Are Rising
Looking ahead, policymakers remain cautious. Malaysia faces potential headwinds from:
Renewed US tariff threats and broader geopolitical tensions
Slower trade growth, forecast at 3.3% in 2026 versus 6.3% last year
A stronger ringgit, which could weigh on export competitiveness
Still, Malaysia’s resilience contrasts with some regional peers, reinforcing confidence in its macro stability.
Domestic Demand Takes Center Stage
With trade risks lingering, Malaysia is leaning more heavily on domestic growth drivers.
These include:
Private consumption, supported by the lowest unemployment rate in over a decade
Expectations of a record number of tourist arrivals in 2026
Investment momentum, underpinned by infrastructure projects and data-centre expansion tied to the global tech upcycle
The government forecasts GDP growth of 4%–4.5% in 2026, moderating from 4.9% last year but still healthy.
Inflation Outlook: Calm, Not Concerning
Inflation remains a key anchor for policy stability.
2025 inflation averaged below BNM’s forecast range
Price controls and fuel subsidies continue to limit cost pressures
Any demand-driven inflation in 2026 is expected to be manageable and temporary, supported by stable wages and targeted government aid
This reinforces expectations that monetary policy will remain steady, barring major shocks.
Investor Takeaway
Malaysia enters 2026 with a rare combination of solid growth and low inflation. While global volatility and trade risks loom, strong domestic demand gives policymakers flexibility to stay on hold — and gives investors confidence in Malaysia’s relative stability within the region.
Comments
Post a Comment