KLCI Holds Steady Ahead of Key GDP Release as Investors Rotate into Domestic Plays

Malaysia’s benchmark index rebounded ahead of the second-quarter GDP release, with investors rotating into financial, property and construction stocks amid global tech weakness.

KLCI Holds Steady Ahead

Malaysia’s benchmark FBM KLCI staged a healthy rebound on Thursday as investors positioned themselves ahead of the release of Malaysia’s second-quarter gross domestic product (GDP) figures, expected to confirm that the economy continues to expand above the 4% level despite a challenging global backdrop.

The benchmark index rose 8.43 points, or 0.49%, to close at 1,722.19, recovering from Wednesday’s 1,713.76 close as broad-based buying returned to the local market. Market breadth improved with gainers outnumbering losers by 599 to 529, signalling improving sentiment among domestic investors.

The rally was largely driven by optimism surrounding Malaysia’s economic resilience, with investors anticipating that today’s GDP figures will reinforce confidence in the country’s growth trajectory despite lingering uncertainties surrounding global trade and the technology sector.

Property stocks led the advance, climbing 1.12%, followed by Financial Services (+0.78%) and Construction (+0.76%). The move suggests investors are rotating towards sectors that stand to benefit most from domestic economic expansion, infrastructure spending and improving business activity.

On the other hand, Telecommunications and Media stocks fell 0.50%, while Technology lost 0.44% and REIT counters slipped 0.26%, reflecting the cautious tone seen across global technology-related sectors.

Overnight, Wall Street struggled to maintain momentum as semiconductor and artificial intelligence-linked stocks came under renewed selling pressure. The Dow Jones Industrial Average slipped 0.20% while the broader S&P 500 declined 0.51%. The technology-heavy Nasdaq Composite suffered the largest losses, falling 1.47%.

The weakness was largely triggered by Taiwan Semiconductor Manufacturing Company’s decision to raise its capital expenditure guidance despite reporting stronger-than-expected quarterly earnings.

While the move signals confidence in long-term AI demand, investors interpreted the increased spending as a potential sign of oversupply risks within the semiconductor industry.

Major chipmakers including AMD, Broadcom, Micron and Arm Holdings were dragged lower, while Alphabet also came under pressure following reports that the company may delay the launch of its next-generation artificial intelligence model.

Nevertheless, the broader US earnings season remains supportive for risk assets, with more than 87% of S&P 500 companies that have reported earnings exceeding analysts’ expectations. Economic indicators also remained largely stable, with retail sales and jobless claims data meeting market forecasts.

Regional markets presented a mixed picture. Hong Kong’s Hang Seng Index rose 1.33%, benefiting from renewed buying interest in Chinese equities, while Japan’s Nikkei 225 fell 2.79%. South Korea’s KOSPI recorded the steepest decline among major Asian markets, dropping 6.37%.

Looking ahead, Malaysia’s GDP release is likely to remain the key catalyst for Bursa Malaysia in the near term. A reading above 4% would reinforce the narrative that domestic demand remains resilient and could provide further support for banking, plantation and construction counters.

However, gains are likely to remain selective rather than broad-based as investors continue to navigate concerns surrounding global technology valuations and AI-related capital expenditure spending.

From a technical perspective, the FBM KLCI has successfully broken above the important 1,700 to 1,720 resistance band and remains comfortably above its short and medium-term moving averages.

Holding above the 1,720 level shifts attention towards the next major resistance zone around 1,760 to 1,770, while 1,674 remains the key support level that traders will be watching closely.

For now, Bursa Malaysia appears poised to extend its recovery, provided economic data continues to support the case for steady domestic growth.