ASEAN FIRST TO MARKET

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ASEAN FIRST TO MARKET

Asia Pacific Equity Research

ASEAN First to Market 02 July 2026

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Malaysia Equity Strategy (Yen Voo, CFA, CA/Khoi Vu, CFA), Malaysia

2H26 outlook: Confidence in the capex cycle

We remain OW Malaysia equities in 2H26 despite a stronger USD outlook, renewed foreign outflows and increasing election-

related headlines. Our view is driven by three reasons: 1) Malaysia’s private sector investment cycle continues to strengthen,

with fixed asset investment rising to 22% of GDP, reinforcing our view that investment-led growth still has further room to run

and is not priced-in; 2) Positioning remains supportive, with domestic mutual funds still holding 6.4% of AUM in cash, while

foreign ownership is at an historical low of 18.3%; and 3) Banks remain attractive portfolio anchors, underpinned by resilient

asset quality, attractive dividend yields and potential capital management upside. In addition, Malaysian equities have fared

relatively better than ASEAN during past periods of strong USD, driven by resilient earnings, light foreign positions, and current

account surplus. Consensus FY26/27E EPS growth remains broadly unchanged at ~7/6%. We therefore expect market

leadership to remain concentrated in companies with direct leverage to Malaysia’s investment cycle rather than a broad market

re-rating. We maintain our OW call on Malaysia with a 1,800 KLCI end-2026 target, driven by 7% EPS growth and a 14x

forward P/E. Top picks: PBK, TNB, SCGB, UWC, 99SMART.

Sunway Construction (Yen Voo, CFA, CA) (SCGB MK, OW, PT RM10.50), Malaysia

DC tracker tops 13GW; no signs of peaking

Our updated proprietary DC tracker now pegs Malaysia’s DC pipeline at 13GW — more than double the initial development