AFFIN BANK PROJECTS FBM KLCI TO REACH 1,850 POINTS IN 2025

KUALA LUMPUR, Dec 10 (Bernama) – Affin Bank Bhd expects Malaysia's main stock index, the FTSE Bursa Malaysia KLCI (FBM KLCI), to trade at 1,850 points next year, compared with the estimated 1,650 points for this year, driven by sustained corporate earnings growth.

Affin Bank president and group chief executive Datuk Wan Razly Abdullah Wan Ali said major sectors that are expected to be overweight include technology, construction, banking, utilities and properties.

"Additionally, we forecast Malaysia’s gross domestic product (GDP) growth to reach 5.2 per cent next year, compared to 5.0 per cent this year," he said during the Institute of Chartered Accountants in England and Wales (ICAEW) Economy Insight Conference 2024 in Kuala Lumpur today.

bootstrap slideshow

Outlining key risks for the 2025 market outlook, Wan Razly highlighted geopolitical risks from regional conflicts, uncertainties surrounding US government policy, particularly after the presidential inauguration on Jan 20, 2025, as well as global economic slowdown and Malaysia’s own policy risks. These factors could affect growth next year.

"Being an open trading nation, Malaysia’s economic growth will be impacted if the global economy slows sharply. As for Malaysian policy risk, delays in implementing structural reforms, such as fuel subsidy rationalisation, could undermine foreign investor confidence," he added.

Maybank Investment Bank Bhd's head of regional equity research, Anand Pathmakanthan, projected Malaysia’s GDP growth at 5.2 per cent in 2024 and 4.9 per cent in 2025, reflecting a robust post-pandemic recovery driven by investments and a supportive policy environment under Budget 2025. This would outpace the ASEAN-6 regional average of 4.8 per cent in 2024 and 4.7 per cent in 2025.

bootstrap slideshow

“The strong investment growth seen in the third quarter (3Q 2024), which posted a 15.3 per cent year-on-year (YoY) increase, likely reflected continued optimism among private businesses, particularly foreign ones,” Pathmakanthan said.

Bursa Malaysia Bhd chairman Tan Sri Abdul Wahid Omar said Malaysia, dubbed the most vibrant market for initial public offerings (IPOs) in ASEAN, saw RM2 trillion in market capitalisation. He also noted that the IPO pipeline for 2025 looks very promising.

“Approved private sector investments totalled approximately RM220 billion in 2024, with both foreign and domestic investments contributing significantly. The last time investment data was this strong was in 2012,” he added.

An Economic Insight Report by ICAEW revealed that while the country is navigating distinct dynamics amid global uncertainties and domestic pressures, the economy remains resilient, bolstered by the electronics sector, though concerns about inflation and weaker domestic consumption persist.

As Malaysia moves toward 2025, economic momentum continues to be strong despite a slowdown in 3Q 2024. The annual growth rate moderated to 5.3 per cent YoY in 3Q 2024 from 5.8 per cent in 2Q 2024.

“The main tailwind has been the ongoing upturn in the electronics cycle, which boosted private sector investment growth as well as export growth,” the report stated.

Regarding the ringgit, the report noted that pressure on the currency was briefly alleviated in 3Q 2024, but much of those gains have been reversed due to the strengthening US dollar since October.

“The recent jump in US Treasury 10-year yields, along with the possibility of more US tariffs, suggests that the dollar may remain stronger for longer. Although inflation was at 1.8 per cent in September, the government's 2025 fiscal plans indicate inflation could rise to approximately 2.8 per cent by 1Q 2026.

“As such, no changes to the policy rate by Bank Negara Malaysia are expected in 2025,” the ICAEW report concluded.

-- BERNAMA