Banking and technology expected to drive Bursa Malaysia

Banking and technology are being positioned as Bursa Malaysia’s main market drivers this week, but investors have been urged to remain selective. The more positive outlook rests on solid corporate financial results and sustained demand for artificial intelligence and semiconductors.

Jeffry Azizi Jaafar, a remisier with Maybank Investment Bank, said the local market could move higher. He named Malayan Banking, Public Bank and Hong Leong Bank as potential leaders of the FTSE Bursa Malaysia KLCI. Recent financial results, he said, showed that major banks could still deliver profit growth, although at a moderate pace.

“

The local stock market has the potential to move more positively, although investors still need to be cautious and select stocks carefully.

Investors are also focused on Bank Negara Malaysia’s overnight policy rate decision on Thursday. The market’s base expectation is that the rate will remain at 2.75%. A decision to hold rates, combined with a statement that does not sound overly cautious about economic growth, could help stabilize the ringgit and allow banking shares to continue supporting the index.

“

If the OPR is maintained and BNM’s statement on economic growth is not too cautious, this could help stabilize the ringgit and allow banking stocks to continue supporting the index.

A more accommodative policy signal could shift buying interest toward interest-rate-sensitive sectors, including real estate investment trusts and property stocks. The effect on banks’ interest margins, however, would still need to be assessed.

Technology and semiconductor stocks could gain momentum from strong company results and Nvidia’s performance and outlook, which indicate resilient global demand for AI and semiconductors. Jeffry said the sector would remain sensitive to US data, including ISM Manufacturing, JOLTS and employment reports. Moderate data and stable bond yields could support technology shares, while data strong enough to keep US rates higher for longer could push yields up and pressure highly valued technology stocks. Construction could provide another source of support, particularly Gamuda and Sunway Construction, because of their strong order books and exposure to infrastructure and data-centre projects.

“

The advantage of the construction sector is that its prospects are supported more by domestic growth and project implementation, so it is not as dependent on global market sentiment as the technology sector.