PETALING JAYA: Investment strategists and analysts opine that the strength of Malaysian equities in 2026 lies in execution, visibility and resilience, rather than fast growth, at a time when global uncertainty remains high.
Moomoo chief market strategist for Southeast Asia, Isaac Lim said this theme is supported by the earnings pipeline built up through investments approved in 2025, especially in digital infrastructure.
“While there was a record outflow of foreign funds in 2025 that could be attributed to the lack of huge and liquid AI plays in Malaysia, our country is rapidly emerging as a regional AI and data centre hub,“ he told SunBiz.
Lim pointed out that in the first half of 2025, approved AI investments reached RM13.29 billion, and data centre and cloud projects contributed almost RM31 billion under the Malaysia Digital initiative, with a cumulative RM144.4 billion in data centre investments approved between 2021 and mid-2025.
Recent deals, such as long-term renewable-power agreements to supply global tech data centres in Malaysia, reinforce that this is not a short-term story, Lim said.
“If execution remains on track, beneficiaries across power utilities, construction, industrial REITs, selected tech and semiconductor names, and developers in data centre corridors like Johor could see multi-year tailwinds.”
Combined with still-reasonable market valuations and the prospect of some foreign flows rotating back into Asean on the AI and infrastructure theme, Lim sees 2026 as a year in which Malaysia can do better, provided investors stay selective, continue to participate in the markets and remain focused on structural winners rather than just the index level.
He said the strongest opportunities for investors are expected to come from sectors that support artificial intelligence rather than from AI companies themselves.
“As approved investments in digital infrastructure, chips and data centres are translated into actual projects on the ground, the beneficiaries on Bursa are likely to be utilities, selected tech and electronics names, construction players, industrial REITs and developers linked to these hubs. For investors, the AI thematic in Malaysia may therefore show up more through these proxies,” he added.
Healthcare is also emerging as an important long-term investment theme, driven by Malaysia’s ageing population and relatively limited social safety net.
“Most countries, Malaysia included, are facing an ageing population. While this is not as acute as in Japan or Singapore, Malaysia also faces the challenge of a population that does not yet have a strong social safety net.”
IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said 2026 will reward careful stock selection and financially strong companies, rather than broad market exposure.
“Overall, 2026 is likely to reward selectivity, policy awareness and balance-sheet strength rather than broad beta exposure,“ he told SunBiz.
Mohd Sedek said the global economy is expected to grow slowly next year, making it harder for companies to increase sales and profits quickly, especially those that rely heavily on exports.
However, he said. this weakness is already widely known and has mostly been factored into the stock prices. “Compared with major markets such as the United States, Hong Kong and China, Malaysian shares are still relatively attractively priced, and investors face less risk of sharp losses if earnings or government policies disappoint.”
Mohd Sedek said Malaysia offers a more defensive and domestically driven investment profile, as corporate earnings are supported by steady local demand, continued infrastructure spending, and gradually improving financial conditions as interest rates ease.
“This environment favours selective investing rather than broad-based risk taking, with greater emphasis on sectors linked to domestic policies and consumer spending rather than global economic cycles,“ he added.
Mohd Sedek said three key factors are expected to support Malaysian equities.
First, tourism-related activities under Visit Malaysia 2026 are likely to lift consumer spending over several quarters, benefiting aviation, hospitality, retail and services.
Second, implementation of the 13th Malaysia Plan provides clearer medium-term visibility for industrials, construction-related value chains and selected infrastructure players, particularly those focused on productivity improvements.
Third, a more accommodative global interest rate environment supports business investment and the banking sector, where steadier loan growth, stable asset quality and normalising margins offer a more balanced earnings outlook.
Mohd Sedek said investors should also keep an eye on two key policy risks.
The first relates to environmental, social and governance requirements, as stricter global disclosure rules are expected to raise compliance costs, especially for smaller companies.
“While this may pressure margins in the short term, it could also accelerate consolidation and favour companies with stronger governance and access to transition financing,“ he said.
The second risk stems from trade policy uncertainty in developed economies, which could affect global supply chains, investment decisions and export demand.
“For Malaysia, the risk is more indirect, through second-round effects on trade and investment. Companies with diversified markets, strong regional exposure and resilient domestic demand are therefore better positioned,“ he said.
BIMB Securities director of research Mohd Redza Abdul Rahman said investment opportunities heading into 2026 are likely to be concentrated in sectors that offer both structural growth and defensiveness.
He said Malaysia’s electrical and electronics sector, including semiconductors and EV-related components, remains a key export pillar as global supply chains continue to rebalance under the China-plus-one strategy.
“Companies with strong original equipment manufacturer relationships and deep engineering capabilities are well positioned for sustained order growth, while AI-related capital spending and increasing electronics complexity support more resilient, longer-cycle earning.”
Redza said opportunities are also emerging from rising investments in advanced packaging and automation, as well as the shift towards higher-value manufacturing. “Firms that invest in engineering talent, automation and regional partnerships stand to benefit as global players look for reliable and future-ready suppliers.”
He added that rising power demand from data centres and industrial users, alongside national renewable energy targets, is driving a multi-year capital expenditure cycle across grid upgrades, solar and energy storage.
“Regulated returns, scale advantages and long-tenure power purchase agreements provide defensive earnings visibility for utilities,“ Redza said, adding that while execution challenges exist, they remain manageable with close coordination between policymakers, utilities and the private sector.
The structural expansion of data centres is also creating spillover opportunities across utilities, industrial property, construction and specialised engineering services, with recurring power demand extending earnings visibility beyond the initial construction phase.
While state-level permitting and energy availability remain key constraints, Redza said, the long-term outlook remains positive as digital economic activity continues to scale.
He added that logistics, industrial property and real estate investment trusts (REIT) continue to benefit from supply chain diversification and the growth of e-commerce.
“Demand for modern logistics assets remains supported by high occupancy rates, rental re-pricing and long lease tenures, offering defensive income with embedded structural growth,“ he said, noting that while risks include a slowdown in global trade or oversupply in specific clusters, long-term demand drivers remain intact.
Meanwhile, the consumer and tourism sectors are expected to benefit from resilient domestic spending and the Visit Malaysia 2026 campaign.
“Stronger domestic consumption combined with Visit Malaysia 2026 should lift earnings across retail, services and hospitality, with spillover effects into transportation, food and beverage, and discretionary retail,“ he said.
Healthcare and ageing-related services also remain a long-term, non-cyclical investment theme, supported by demographic trends, rising healthcare awareness and medical tourism.
“Operators with scale, specialist capabilities and higher-acuity services offer earnings defensiveness amid macro uncertainty, with future opportunities in areas such as specialist care, diagnostics, telehealth and preventive health,“ Redza said.
The banking sector, meanwhile, continues to serve as a portfolio anchor, supported by stable interest rate settings, strong capital buffers and consistent dividend generation.
“Banks provide earnings resilience in a lower-growth environment, with capital strength and dividends supporting total returns, while digitalisation and new financial services offer longer-term growth optionality,“ he said.
Financial columnist Tey Eng Xin said that while global markets are likely to remain volatile due to ongoing geopolitical tensions and social unrest, Malaysia continues to offer investment opportunities, supported by its relatively resilient demographics.
He identified three sectors with stronger potential: consumer, plantation, and telecommunications and media.
The consumer sector, he said, has emerged more resilient post-pandemic, underpinned by household spending that accounts for about 60% of Malaysia’s GDP.
Consumer behaviour has also shifted towards higher-quality food and lifestyle products, benefiting food and beverage companies in particular.
The plantation sector is another area to watch, as strong gains in commodities such as gold and silver in recent years could spill over into soft commodities. Palm oil prices, he noted, stand to benefit from an inflationary global environment.
Meanwhile, the telecommunications and media sector is expected to gain from rising digital advertising expenditure, driven by consumer-facing and lifestyle brands.
However, he cautioned that not all advertising players will benefit equally, as companies are increasingly favouring platforms that offer integrated, omni-channel solutions over single-channel providers.
