KUALA LUMPUR (Oct 12): Consumer and property stocks could emerge as among the main beneficiaries of Budget 2027, although analysts see limited upside for the broader equity market.
In a research note, Hong Leong Investment Bank (HLIB) Research said higher cash assistance, expanded tax reliefs and the increase in minimum wage could benefit consumer companies catering to the mass market, particularly those participating in the Sumbangan Asas Rahmah (Sara) programme.
Among the potential beneficiaries identified were 99 Speed Mart Retail Holdings Bhd (KL:99SMART), Mr DIY Group (M) Bhd (KL:MRDIY), Aeon Co (M) Bhd (KL:AEON) and Focus Point Holdings Bhd (KL:FOCUSP).
Analyst said Budget 2027 measures to boost household spending and encourage homeownership are expected to support demand.
It also expects national carmakers Proton and Perodua to benefit from improved consumer purchasing power, providing a potential boost to DRB-Hicom Bhd (KL:DRBHCOM), Sime Darby Bhd (KL:SIME) and MBM Resources Bhd (KL:MBMR).
On the property front, HLIB said the extension and expansion of stamp duty relief for first-time homebuyers could support developers targeting this segment, including Matrix Concepts Holdings Bhd (KL:MATRIX) and SkyWorld Development Bhd (KL:SKYWLD).
The anticipated release of the Johor-Singapore Special Economic Zone (JS-SEZ) masterplan by year-end could also provide a boost to property and construction companies with exposure to Johor, such as UEM Sunrise Bhd (KL:UEMS) and Kimlun Corp Bhd (KL:KIMLUN).
Meanwhile, BIMB Securities said it favours domestic-oriented sectors, including technology, utilities, construction, property and consumer companies, citing continued infrastructure investment and measures to support household incomes.
The research house highlighted RM83 billion in development expenditure and RM15 billion in power grid investments as among the spending commitments that could sustain demand for infrastructure-related services.
Smaller-cap stocks may see greater benefits
In another note on Monday, Maybank Investment Bank said it expects Budget 2027 to provide more opportunities for smaller-cap stocks, compared to the FBM KLCI's heavyweight constituents.
It said Budget 2027 measures would have limited direct implications for large-cap sectors, reducing the likelihood of a significant market-wide rally.
Instead, the investment bank sees opportunities in selected companies involved in renewable energy, technology, water infrastructure and mechanical and electrical engineering works.
Maybank IB remained positive on consumer staples, with Nestle (Malaysia) Bhd (KL:NESTLE) as its preferred pick, alongside selected renewable energy and construction-related companies.
Nevertheless, the investment banks cautioned that higher labour costs could offset some of the benefits from stronger domestic consumption.
BIMB Securities estimated that the wage increase could raise total production costs by 2% to 5% for labour-intensive businesses such as plantation and rubber glove producers.
Despite the sector-specific opportunities, HLIB expects Budget 2027 to have little immediate impact on the benchmark index, given its greater emphasis on household welfare than measures directly supporting listed companies.
It maintained its year-end FBM KLCI target of 1,720 points.