KUALA LUMPUR (Sept 4): The second half of 2026 could turn out to be tough for most Malaysian corporates, Maybank Investment Bank cautioned.
The recently-ended quarter will probably be the best for 2026 and July onwards could be challenging from ongoing geopolitical tensions and tapering macro expectations, the research house said in a strategy note and advised a more selective stance on Malaysian stocks.
“The ongoing Middle East conflict, even if it de-escalates, could leave lingering cost pressures with oil and commodity prices staying higher for a while due to supply disruptions,” the house said.
Maybank Investment is keeping its year-end target for KLCI at 1,750, which would imply valuations of 15 times its forward earnings and equivalent to its 10-year mean.
The April-June quarter saw sequential improvement across most sectors with plantations and transport ranked the best, while utilities, telcos and media declined, according to Maybank Investment. Core earnings rose 15.4% quarter-on-quarter and 11.8% year-on-year across stocks under coverage.
There were also more companies reporting results that came in within expectations or above estimates than those that missed expectations, the house said.
For strategy, Maybank Investment prefers smaller companies exposed to mechanical and electrical works, technology and renewable energy, where it expects contract wins and news flow to remain strong.
“We are selective on large caps for the rest of the year and would focus more on the small-mid caps,” the house said, noting that banks could see softer prospects in the second half with capital management only as a catalyst.
Investors should be “tactical” with plantation stocks for the next three months as El Niño weather conditions develop and boost palm oil prices, Maybank Investment said.