Manulife says local equities poised for long-term re-rating

PETALING JAYA: Malaysian equities are poised for a long-term re-rating, underpinned by the currency, domestic consumption, tourism inflows and capital market pipeline, Manulife Investment Management said.
Manulife Investments head of Asian equities June Chua said the firm views Malaysia as a structural re-rating story rather than a short-term value trade.
“We do see that Malaysian equities are poised for a longer term re-rating instead of a tactical value opportunity,” she told reporters at the 2026 Asia Investment Outlook Media Briefing yesterday.
Chua said that at an index level Malaysia missed out on a rally in 2025 but the strong ringgit has improved returns for foreign investors.
“So if you’re looking from a perspective of a foreign investor the ringgit has actually given you a 10% appreciation last year.”
Chua said that strong domestic consumption will continue to flow through in Malaysia this year.
“What you’ve also seen is that the tourism numbers going into Malaysia have been phenomenal,” she added.
Chua said this will translate into having a multiplier effect on the local consumption and will translate into better corporate earnings.
Chua also pointed to positive capital market catalysts including the pipeline of large initial public offerings coming.
“I understand Sunway Healthcare should be happening soon this year. That should actually increase a lot of investor appetite to look at Malaysia.”
In addition, Malaysia’s relatively high dividend yield across the broader market enhances its appeal in a rate-cut cycle, she said.
“So all in all I would say that we don’t think Malaysia is just tactical.
“We actually do think it’s right for a long-term re-rating,” Chua said.
Malaysia’s equity market underperformed several regional peers in 2025 as global investor attention gravitated toward AI-heavy markets such as the US, South Korea and Taiwan, despite relatively stable domestic fundamentals.
The benchmark FBM KLCI rose about 2.3% for the year, lagging indices such as Singapore’s STI and Indonesia’s JCI which both gained over 20% in 2025.
Foreign equity ownership in Malaysia has also remained near multi-year lows.
Foreign investors were net sellers of Malaysian equities, with cumulative foreign net outflows of around US$4.8 billion in the first 11 months, marking one of the largest annual outflows since 2010.
However, the ringgit was among Asia’s stronger performers in 2025, appreciating 9%-9.8% against the US dollar, one of the best showings in the region, benefiting from improved external balances and capital inflows linked to data centre investments and AI-related infrastructure.
Domestic demand in Malaysia remained resilient, with the economy expanding strongly.
The estimates show GDP growth of about 4.9% in 2025, above earlier projections of 4%–4.8%.