KUALA LUMPUR (July 13): Political coalition Barisan Nasional’s (BN) stronger-than-expected victory in the Johor state election has increased expectations of an early 16th general election (GE16), with analysts warning that the prospect could lift political risk premiums and trigger greater market volatility.
In a market outlook note, Apex Securities said BN’s win strengthens the United Malays National Organisation’s (Umno) bargaining position within the unity government and raises the likelihood that GE16 could be called in the second half of 2026, with the Negeri Sembilan state election on Aug 1 emerging as the next key political catalyst.
The research house said investors should expect domestic political developments to become a bigger driver of market sentiment over the coming months, as the higher probability of an early general election is likely to encourage a more cautious stance.
Separately, CIMB Securities said BN’s victory, in which it secured 48 of the 56 seats contested compared with 40 seats in 2022, exceeded market expectations of between 40 and 45 seats.
While the research house expects limited immediate market impact, it said the stronger mandate reinforces expectations of policy continuity and supports the continued implementation of Johor’s investment and infrastructure plans, according to the strategy note.
CIMB Securities said the outcome improves visibility over the roll-out of the Johor-Singapore Special Economic Zone (JS-SEZ) blueprint, which is expected in the fourth quarter of 2026, and the progress of major infrastructure projects, including the RM7 billion Elevated Autonomous Rapid Transit (E-ART) system.
It added that the roll-out of the JS-SEZ blueprint and the commencement of Rapid Transit System (RTS) services, targeted for early 2027, should support medium-term demand for landed residential, industrial and logistics developments in Johor, although it remains cautious on the high-rise residential segment due to the large supply pipeline.
Among its coverage, CIMB Securities said UEM Sunrise Bhd (KL:UEMS) remains its preferred Johor property exposure, with Eco World Development Group Bhd (KL:ECOWLD), Mah Sing Group Bhd (KL:MAHSING), Sunway Bhd (KL:SUNWAY), S P Setia Bhd (KL:SPSETIA) and Malayan Cement Bhd (KL:MCEMENT) also on its top picks.
Despite its near-term caution, Apex Securities maintained its year-end FBM KLCI target of 1,787 points, citing that Malaysia’s macroeconomic outlook continues to be supported by resilient domestic demand, ongoing infrastructure and data-centre investments, improving external demand, and strength in the technology and electrical and electronics sectors.
The research house said it expects resilient corporate earnings and greater policy clarity after the general election to outweigh near-term political headwinds.
“Hence, we continue to view election-related weakness as a buying opportunity,” said the firm.