KUALA LUMPUR (Oct 7): Apex Securities expects volatility to remain elevated in the fourth quarter for equities, citing higher oil prices, persistent geopolitical risks in the Middle East and interest rates staying higher for longer.
In a strategy note on Wednesday, the research firm said Budget 2027 is unlikely to change the market's direction by itself, noting that stock selection will matter more than blanket exposure to Budget 2027 beneficiaries.
“Domestically, political uncertainty ahead of GE16 and the potential KLCI expansion could add to near-term positioning and index-related overhang,” said Apex Securities.
It maintained its end-2026 FBM KLCI target at 1,770 points, adding that Budget 2027 is mildly positive for the index but not a trigger for a broad re-rating, with the earnings impact concentrated in infrastructure, energy transition, technology and selected domestic-demand names.
The research house is keeping a “barbell strategy”. This pairs structural-growth themes, namely artificial intelligence (AI), semiconductors, data centres and energy infrastructure, with companies it considers resilient to macro swings and likely to gain from targeted domestic support.
In terms of sectors, Apex has an "overweight" rating on construction, technology, energy and utilities, property and plantation, and "neutral” on consumer.
It said construction, energy and utilities have the clearest direct read-through from policy, while technology remains the strongest structural theme. It does not expect Budget 2027 to start the technology cycle, saying customer demand, capacity expansion and order-book conversion are the bigger earnings drivers.
“The key message for investors is that Budget 2027 is unlikely to change the market’s direction by itself. Instead, it should reinforce several investment themes already in place,” said Apex Securities.
On data centres, Apex Securities said 3.8GW of committed capacity is still to be built, with an estimated RM76 billion to RM95 billion of remaining contract value, which it described as an additional demand pool for contractors. It named Tenaga Nasional Bhd (KL:TENAGA) as a beneficiary of regulated grid capital expenditure and data-centre connections.
A standalone storage incentive would be an upside surprise, benefitting Solarvest Holdings Bhd (KL:SLVEST) and Samaiden Group Bhd (KL:SAMAIDEN) most directly, said the research house.
For plantation, Apex said earnings remain tied to crude palm oil prices, which it forecasts at RM4,500 per tonne for 2026 and RM4,700 for 2027.
A minimum wage increase is the main near-term cost risk for plantation given the sector's labour intensity.
For consumer, it said higher cash assistance is likely to be partly offset by higher costs and subsidy changes, so it prefers essential and affordable-consumption names.