Malaysia Shows Macroeconomic Resilience, Political Stability Amid Global Market Volatility - RHB Investment Bank
KUALA LUMPUR, April 28 (Bernama) -- Macroeconomic resilience and political stability are key strengths for Malaysia in navigating the volatile global economic environment amid United States (US) policy shifts, according to RHB Investment Bank Bhd.
The investment bank said in a note today that Malaysia's strategic growth initiatives will stimulate investment flows over the medium term, but it remains cautious on the negative spillover effects from global trade issues.
"The progressive growth initiatives being implemented by the government will strengthen Malaysia’s ability to attract foreign investment from or around the region, drive domestic investment, and improve economic resilience.
"Malaysia stands out among other ASEAN emerging market peers from a political stability and macroeconomic growth fundamentals’ standpoint," it said.
According to RHB Investment, the 2025 gross domestic product (GDP) growth forecast for Malaysia is now at 4.5 per cent year-on-year (y-o-y) on external uncertainties.
"While we believe the imposition of US tariffs are transactional – leaving the door open to negotiations – uncertainty will keep investor sentiment on edge.”
Meanwhile, RHB Investment Bank has cut its end-2025 FTSE Bursa Malaysia KLCI (FBM KLCI) target to 1,650 from the previous target of 1,750 after cutting the target price-to-earnings (P/E) ratio back to the long-term mean of 14.7 times from 16 times.
The market has consolidated further with valuations now at even less demanding levels, it said.
“Maintaining defensive colour in equity portfolios will be a key strategic emphasis to conserve higher cash holdings in the short term, but selectively accumulating quality domestic-centric stocks on weakness is also an important medium-term objective,” it said.
In the near term, the investment bank believed that investor interest is likely to remain skewed towards the larger-cap space due to its below-mean valuation and superior liquidity, which are particularly attractive in the currently volatile external environment.
“Given this outlook, we recommend adopting a phased strategy -- investors should first focus on mid-cap stocks, which offer a more balanced risk-reward profile,” it added.
According to RHB Investment, as the market begins to stabilise and external uncertainties subside, a gradual shift towards the smaller-cap names could unlock additional alpha returns, should the rebound be sustained.
“Ample local liquidity, stable domestic consumption with a reform agenda remain constructive to the Malaysian equity market,” it noted.
-- BERNAMA
