Get Ahead in 2026: Three Investment Hotspots to Watch

(Kuala Lumpur, Dec 30) Despite choppy performance in the Malaysian equity market over the past year, analysts believe opportunities remain for investors who adopt a clear strategy—particularly by focusing on regional growth areas in southern, northern and eastern Malaysia.

According to Chua Chuan Hin, Senior Research Analyst at iFAST Capital, foreign ownership in the Malaysian stock market has fallen to a historical low, suggesting limited downside risk from current levels.

He added that as the U.S. Federal Reserve (Federal Reserve）is expected to continue cutting interest rates next year, global capital flows are likely to return to emerging markets, with Malaysia poised to be a key beneficiary.

“Domestically, several supportive factors are in play. The second round of civil servant salary adjustments will take effect from January 1 next year, reinforcing consumer spending alongside the earlier minimum wage hike. At the same time, the government is actively promoting Visit Malaysia 2026 to attract more tourists.”

Chua also noted that the government is expected to distribute another round of financial assistance early next year, while economists anticipate a possible interest rate cut by Bank Negara Malaysia—both of which could further boost household purchasing power.

Regional Growth Themes in Focus

From an investment perspective, Chua highlighted government-led development initiatives in strategic economic zones, particularly the Johor–Singapore Special Economic Zone and the Northern Technology Corridor.

“The Johor–Singapore Special Economic Zone will benefit multiple sectors, including construction. Meanwhile, Kedah and Penang in northern Malaysia remain key technology hubs and major destinations for foreign direct investment. Intel has recently reaffirmed plans to expand its operations in Malaysia, reinforcing the growth outlook for the northern region.”

He added that East Malaysia also presents opportunities, as the government continues to invest heavily in energy-related development, including renewable energy and water infrastructure projects.

KLCI Seen Climbing Towards 1,730

On the macro front, Chua said a strengthening ringgit against the U.S. dollar could further support domestic consumption, while lower import costs would help ease cost pressures for industrial companies and improve profit margins.

“Although the ringgit’s appreciation may moderate in 2026, its strong performance this year has already helped offset the impact of the expanded Sales and Services Tax (SST) framework.”

He also identified banking stocks as a sector worth monitoring. While rate cuts may compress net interest margins, rising loan demand from businesses is expected to provide a supportive backdrop.

Overall, supported by resilient domestic consumption and the potential return of foreign funds, Chua expects the FTSE Bursa Malaysia KLCI (FTSE Bursa Malaysia KLCI）to climb towards the 1,700–1,730 range, representing an upside of around 10% from current levels.