1H 2025 Market Strategy: Opportunity Amid Uncertainty

Global Drivers: Market direction in 2025 will be shaped by developments such as US interest rate cuts, US-China trade tensions, and geopolitical risks. Domestically, focus will center on the removal of RON95 blanket subsidies.

US Interest Rates

Further rate cuts are anticipated in 2025, though at a slower pace, with inflation still above the 2.0% target. Two cuts are expected, but escalation in trade tensions could prompt additional action.

Market Outlook

Volatility is likely due to global trade conflicts, but upside remains supported by a stable domestic political landscape, robust corporate earnings growth, and economic stability.

Valuation & Index Targets: The FBM KLCI trades attractively at 14.2x 2025F P/E, below its 5-year average. The 2025 year-end target is revised to 1,760, driven by corporate earnings growth (+10.4% YoY) and index adjustments, with a new 2026 target at 1,810.

Sector Focus

Utilities: Positioned for growth due to rising electricity demand, EV adoption, and renewable energy policies.

Technology: Benefiting from global trade diversification, semiconductor recovery, and local initiatives like the National Semiconductor Strategy.

Data Centres: Leveraging AI and cloud computing growth, with Malaysia offering competitive infrastructure and land.

Top Picks for 1H 2025: HLBANK, SCGBHD, UUE, LAGENDA, SLVEST, PEKAT, INARI, FRONTKN, MALAKOF.

The strategy emphasizes selectivity and a focus on sectors poised for growth amid a volatile but opportunity-rich environment.

Source: Apex Securities

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