KUALA LUMPUR (Dec 10): Visit Malaysia Year campaign will be a key driver for Malaysia, providing an extra boost to select stocks as well as the broader economy in 2026, MBSB Research said.

An influx of international tourists will lift airlines’ load factors and increase mall footfalls and hotel occupancy rates, as well as raise consumer and discretionary spending, MBSB said in its strategy note for 2026. Hospitals catering to medical tourists will also benefit, the research house noted.

Tourism remains a “structural driver” for consumer demand and momentum is set to accelerate further under the government’s coordinated push, MBSB Research said.

Malaysia is targeting to welcome 47 million foreign tourists in 2026, which will generate some RM329 billion in receipts under the Visit Malaysia Year campaign. To support the campaign, the government is splurging RM500 million on promotions and incentives, including tax breaks for tour operators.

Tourism receipts are a major source of foreign exchange for Malaysia, making the sector that contributed more than 15% to gross domestic product highly crucial for the economy.

Overall, MBSB Research expects Malaysia's benchmark 30-stock FBM KLCI to hit 1,750 points next year as "brighter skies have emerged" with most of the uncertainties left behind in 2025.

"We expect the local market to gain further ground underpinned by [a] healthy economy as well as corporate earnings outlook, supported by undemanding equity valuations, and aided by pent-up buying from [the] return inflow of foreign funds," its strategy note read.

Earnings of listed companies under coverage may grow 7.4% next year, supported by broad-based sectoral improvements and recovering external trade, according to MBSB Research’s forecast.

For strategy, MBSB Research is positive on banking, construction, consumer, healthcare, property, utilities and renewable energy sectors.

The house’s top stock picks include Capital A Bhd (KL:CAPITALA), Tenaga Nasional Bhd (KL:TENAGA), Leong Hup International Bhd (KL:LHI), Gamuda Bhd (KL:GAMUDA), Public Bank Bhd (KL:PBBANK) and Sunway Real Estate Investment Trust (KL:SUNREIT).

The projected total returns for its recommended stocks range from 11% to 71%, benefiting from thematic catalysts such as the infrastructure execution under the 13th Malaysia Plan, resilient consumption and growing renewable energy demand, MBSB Research added.