KUALA LUMPUR: Maybank Investment Bank Bhd (Maybank IB) expects the FBM KLCI for 2026 to be a bearish scenario, pointing to a target of 1,730 points and a possible lift to 1,850, implying a 16 times multiple for the year, driven primarily by the banking sector, which remains the largest component of the index.
Research head, Lim Sue Lin said, however, the FBM KLCI could potentially bottom at around 1,550, while in terms of earnings growth – an important focus for fund managers and investors – the investment bank is projecting approximately 8% growth in 2026, driven once again by the banking sector.
“While banking sector earnings growth may be a modest 5%, its roughly 50% share of total KLCI sector earnings gives it significant weight in our overall assessment.
“We also expect sectors such as construction and healthcare to continue delivering strong earnings growth this year, although there are emerging signals of potential headwinds from the utilities and telecommunications sectors,” she said in her presentation at a media briefing on themed “Malaysia 2026 Macro and Market Outlook” today.
In terms of infrastructure, Lim said, Malaysia continues to offer a robust pipeline of projects nationwide, spanning from the northern states to the south – particularly Johor, supported by momentum surrounding the Johor-Singapore Special Economic Zone (JS-SEZ) – as well as extending to Sabah and Sarawak, where numerous projects remain available for tender.
On the consumption front, household conditions have largely stabilised following concerns about subsidy rationalisation that materialised mid-last year, providing a more supportive backdrop for consumer spending.
Recently announced wage measures, such as increases in civil servant salaries and minimum wage adjustments, along with consistently strong employment trends, further support this resilience.
“Collectively, these factors should underpin continued resilience in consumer staples, retail, and mass-market discretionary spending. We have also taken the opportunity to assess trends within do-it-now service transactions,” Lim said.
She said the macroeconomic optimism the bank research arm is seeing has led both businesses and investors to adopt a more constructive stance.
Against this backdrop, Maybank IB has identified five key themes for 2026.
The first theme is the infrastructure upswing, where Maybank IB sees growing momentum in real investments, such as rail projects, logistics-related infrastructure, industrial parks, and data centres, with potential spillover benefits to the property sector.
The second theme focuses on technology and industrial transformation.
“While near-term uncertainties persist, we remain cautiously constructive on Malaysia’s long-term technology prospects, supported by national initiatives such as NIMP 2030 (New Industrial Master Plan 2030) and the National Semiconductor Strategy,” Lim said.
The third theme centres on the green and energy transition, with a strong emphasis on renewable energy. Policy tailwinds and momentum since the National Energy Transition Roadmap 2050 launch in 2023 underpin a positive multi-year outlook.
The fourth theme is on domestic demand resilience, driven by supportive macro conditions and underpinned by consumer-related sub-themes, where Maybank IB continues to see room for incremental improvement despite regulatory constraints.
The fifth theme relates to tourism and state-driven activity, which cuts across multiple sectors.
“We remain positive on Johor, increasingly constructive on Penang and Malacca amid renewed development momentum, and see further expansion opportunities in Greater KL and Selangor as the state enters the second Selangor Plan for 2026-2030.
“We are seeing strong momentum building in the investment space and remain positive on the JS-SEZ, supported by the rollout of Malaysia Vision Valley 2.0, which is expected to drive further infrastructure upgrades, enhancements to industrial parks, and continued expansion of industrial property developments. We also maintain a constructive view of Selangor,” Lim said.
She noted that as Selangor enters the second phase of its development plan, focus is expected to intensify on aerospace, water infrastructure, and further expansion under the Carey Island development, while Sarawak should continue to see positive news flow in the renewable energy landscape.
“Banks, as a key sector, are expected to continue investing in renewable energy and related development segments in 2026.
“Within the consumer space, we see value in Nestle, which, despite appearing expensive on a price-to-earnings basis, remains a key defensive proxy,” Lim said.
