KUALA LUMPUR (Jan 16): With the "planning phase" of national blueprints now concluded, 2026 is emerging as a critical year of execution for the country. As the 13th Malaysia Plan (13MP) kicks off alongside the Visit Malaysia 2026 campaign, we dive into the catalysts and hurdles facing 11 selected sectors — from tech and utilities to aviation and property — as they balance global uncertainties against domestic growth drivers.

A strong global appetite for high-performance computing and AI is set to spark a recovery for Malaysia’s semiconductor players in 2026. But this rebound will be 'selective,' with analysts cautioning that the gain will not be shared evenly among the players. 

Research houses expect AI-related investments to push the global semiconductor market to grow by more than 25% in 2026, bringing it close to US$1 trillion (RM4.1 trillion) in value.

This growth comes from the need for powerful chips used in AI servers and data centres, which process huge amounts of data and require faster and more efficient technology.

“[However], the cycle is becoming increasingly concentrated with front-end strength heavily skewed to AI data-centre, high-end smartphones and infrastructure,” Kenanga Investment Bank Research said in a recent note.

On the other hand, demand for chips used in cars and older-generation products — known as mature-node segments — is recovering more slowly, the research house noted.

TA Securities, which maintained a “neutral” stance on the sector, said that while there will be better order visibility among the key players, this does not automatically lead to stronger profits.

“Most technology stocks under our coverage have yet to experience anticipated meaningful recovery,” it said, citing cost pressure, margin challenges and execution risks.

Overall, the spillover demand from AI servers and data centres will remain the industry's key catalyst, which should lift factory utilisation rates and support higher-value products for selected Malaysian assembly, testing and electronics manufacturing services (EMS) players.

Kenanga noted that the current upcycle, which began in late 2023, “could extend into mid-CY2026 or beyond”, as AI demand is structural rather than temporary.

Still, risks remain. TA Securities cautioned that “Trump policy risk remains a key overhang”, with potential changes in US trade and tariff policies continuing to affect sentiment.

Top picks for this industry include Inari Amertron Bhd (KL:INARI), due to its exposure to radio frequency (RF) components used in AI servers, and Unisem (M) Bhd (KL:UNISEM), which benefits from rising demand for advanced chip packaging and backend services linked to data centres. — by Luqman Amin

After a correction of over 9% in 2025, analysts expect a strong rebound for the utilities sector in 2026. Power plant developers like Tenaga Nasional Bhd (KL:TENAGA) (target price [TP]:RM15.77), Malakoff Corp Bhd (KL:MALAKOF) (TP:99 sen) and YTL Power International Bhd (KL:YTLPOWR) (TP:RM4.38) are the top picks, as they are seen as potential beneficiaries of a wave of upcoming capacity build-ups.

While no deadlines have firmed up, market optimism is fuelled by the Energy Commission's exploration of new gas power plant projects, and expectations that large scale solar projects dished out last year will move into the construction phase.

The power sector infrastructure expansion “is expected to ramp up further as projects transition” from planning in 2025 into full deployment in 2026, said PublicInvest Research. This shift reinforces a multi-year investment upcycle across the entire power value chain.

For thermal power plant operators, declining or stable coal and natural gas prices are currently bolstering cash flows. However, a key wildcard is the upcoming carbon tax, which the government has confirmed would be implemented in 2026. The specific tax rate and the extent to which costs can be passed through to consumers have yet to be fixed, posing a potential risk to earnings.

The expansion of power-hungry industries like data centres, alongside grid enhancement and battery storage adoption, will also benefit power infrastructure firms, said analysts who have issued “buy” calls across the board for companies involved in transmission and distribution lines, substations, mechanical and electrical works, and cable supply.

Solar specialists like Solarvest Holdings Bhd (KL:SLVEST) (TP:RM2.23) and Samaiden Group Bhd (KL:SAMAIDEN) (TP:RM1.76) are also set to benefit from a surge in construction works for new large scale solar projects across the country, though analysts warned that returns for asset owners may remain modest.

Samaiden also serves as a proxy for water infrastructure expansion. While the 2025 tariff revision and rising water demand from industries and data centres have largely been priced in, investors may want to keep an eye on future project updates in the peninsula, as well as upcoming hydro projects in Sabah. — by Adam Aziz

Malaysia’s oil and gas (O&G) industry faces another choppy year, pressured by lower oil prices and domestic upstream uncertainties. Nevertheless, analysts have projected earnings growth for the majority of stocks under their coverage.

The Bursa Malaysia Energy Index fell 7% in 2025, bringing forward earnings multiple to 9.75 times, well-below its three-year average of 11 times, Bloomberg data showed. Despite the broader index slump, 2025 saw standout performances from players such as drilling firm Velesto Energy Bhd (KL:VELESTO), up 77%, and offshore support vessel operator (OSV) Lianson Fleet Group Bhd (KL:LFG), whose share price has doubled.

For 2026, investor sentiment remains dampened due to a projected surplus that is expected to keep crude prices near US$61 per barrel.

Meanwhile, analysts are divided on the outlook for capital expenditure (capex) in Malaysia, a primary indicator of upstream activities. A key concern is the friction between “two local oil majors”, PETRONAS and Petros, which Maybank IB Research said is blurring the domestic capex outlook. Low capex could delay a re-rating of the sector, making it "unlikely to happen anytime within the next six-12 months”. This would cap earnings growth for maintenance services providers, many of whom have seen their share price drop by about one-third in 2025.

Still, there are growth drivers: i) Onshore support vehicle or OSV market: There remains healthy supply-demand dynamics due to an ageing fleet. ii) Upstream services: Recovery in drilling and a rise in well services, particularly plugging and abandonment. iii) Global super-cycle: Persistent demand for floating assets.

Industry players are looking toward the national oil company's 2026-2028 activity outlook, expected to be published in mid-January, for firmer guidance.

BIMB Securities remained optimistic on new project sanctions, citing the massive RM11 billion tenderbook held by fabricators like Malaysia Marine and Heavy Engineering Bhd (KL:MHB). But for petrochemicals players, recovery remains bleak, as the global capacity glut continues to outpace demand.

Analysts' current top picks are shipping firm MISC Bhd (KL:MISC) (average TP:RM8.51) and storage tank operator Dialog Group Bhd (KL:DIALOG) (TP:RM2.28), which are expected to see higher service demand in a low price environment, as well as FPSO players Yinson Holdings Bhd (KL:YINSON) (TP:RM3.13) and Bumi Armada Bhd (KL:ARMADA) (TP:50 sen). — by Adam Aziz

The earnings outlook for the plantation sector remains tilted in favour of upstream players. This is bolstered by firm crude palm oil (CPO) prices and tight supply conditions, both of which provide clear earnings visibility in 2026. 

While Indonesia’s B50 biodiesel mandate — previously seen as a major upside catalyst — has been delayed, analysts remain optimistic. CPO prices are expected to stay resilient, holding steady around the RM4,000 per tonne level this year.

Support for CPO prices is expected to be largely driven by Indonesia's intensified crackdown on forest encroachment. As the world’s largest palm oil producer, Indonesia has stepped up efforts to seize plantations operating illegally within forest zones. Significant portions of the seized plots are being transferred to state-owned Agrinas Palma Nusantara (Agrinas).

“There may be potential upside to CPO prices if productivity at Agrinas-managed estates deteriorates further,” CGS International said in a Jan 13 report. 

Beyond land seizures, recent fiscal policy changes in Jakarta are further tightening the market. Indonesia recently hiked its CPO export levy from 10% to 12.5%, which could provide additional support to prices by limiting export volumes.

Output from Malaysia, the world’s second-largest palm oil producer, is also expected to ease this year as estates enter a seasonal resting phase following strong production in recent months. Production growth is also constrained by stagnant planted areas, heavy reliance on foreign labour and a rising proportion of ageing oil palm trees. 

For exposure to strong CPO prices, investors may look to plantation stocks with attractive dividend yields, such as Hap Seng Plantations Holdings (KL:HSPLANT) and Ta Ann Holdings Bhd (KL:TAANN). Other names are TSH Resources Bhd (KL:TSH), Sarawak Oil Palms Bhd (KL:SOP) and SD Guthrie Bhd (KL:SDG).

It is not without its downsides though.

Slower global economic growth and weather-related disruptions could weigh on CPO demand, while an unfavourable palm oil-gas oil (POGO) spread may limit biodiesel blending.  In addition, competition from alternative feedstocks — particularly soybean oil — could cap palm oil’s pricing power in price-sensitive markets such as India and China, analysts said.

A firmer ringgit is also a negative for plantation companies, as it reduces translated revenue and profits while making Malaysian CPO less competitive against other vegetable oils. TA Securities estimated that a 5% appreciation of the ringgit against major currencies could cut sector earnings by about 10.6% in 2026, according to its Dec 17 report.

In addition, analysts remain cautious on integrated players amid a potentially slower recovery in downstream margins due to higher feedstock costs and competition from Indonesia. — by Syafiqah Salim

Year 2026 is shaping up to be a sweet spot for Malaysia’s construction sector, supported largely by a growing pipeline of data centre (DC) projects, as private-sector investment increasingly replaces government spending as the main earnings driver.

Malaysia continues to strengthen its position as a regional DC hub, with multiple large-scale projects expected to be constructed or completed from 2026 onwards, particularly in Johor, Selangor and Cyberjaya, analysts noted.

These projects are typically backed by multi-national cloud and technology giants, offering contractors longer job durations and better revenue visibility.

Kenanga Investment Bank Research highlighted that DCs are now anchoring sector earnings, noting that the facility-related jobs “continue to provide earnings visibility and margin resilience compared with conventional infrastructure projects”.

This comes as DCs are technically complex buildings that require specialised electrical systems, cooling infrastructure and strict delivery timelines — areas where experienced contractors can command better margins.

As such, the continued rollout of private-sector DC investments, which are less exposed to policy delays and budget constraints, are going to be the biggest key catalyst for the construction sector in 2026.

However, the outlook is not without risks.

TA Securities cautioned that “execution risk remains for contractors with heavier exposure to public-sector jobs”, citing delays related to approvals, land matters and changes in project sequencing.

Cost pressures also remain a concern as TA Securities warned that “rising labour costs and tighter subcontractor availability could limit margin expansion”, particularly if competition for DC projects intensifies as more contractors pivot into the segment.

Selected players being favoured in the industry include Gamuda Bhd (KL:GAMUDA) for its strong balance sheet, proven execution capabilities and exposure to both infrastructure and data centre projects.

Sunway Construction Group Bhd (KL:SUNCON) is also viewed positively, supported by its track record in complex buildings and a healthy private-sector order book. — by Luqman Amin

Private hospitals are likely to remain under pressure from rising medical inflation, which is forecast to increase further to 16% in 2026. The potential rollout of a diagnosis-related group (DRG) reimbursement framework also adds medium-term uncertainty.

Bank Negara Malaysia’s move to cap medical insurance premium increases at 10% until end-2026, is expected to weigh on private hospital operators, an analyst covering the sector told The Edge, as it will force insurers to tighten admission approvals to control costs, leading to a slowdown in inpatient visits.

The government has deferred the rollout of DRG to 2027 to allow sufficient time for data collection, system development and pilot testing.

“While full execution of DRG by 2026 appears unlikely, early groundwork could begin, increasing scrutiny of bill sizes and accelerating pricing convergence over time. This introduces medium-term downside risk to inpatient margins, particularly for providers with heavier reliance on corporate and insurance payors,” BIMB Securities said in its Dec 23 report.

While the healthcare sector continues to benefit from the normalisation of elective procedures, a recovery in medical tourism and supportive demographic trends such as an ageing population, these positives have yet to translate into meaningful upside. As such, analysts have maintained a “neutral” stance on the sector, citing limited valuation headroom and ongoing cost pressures.

Private hospitals’ shift towards daycare and ambulatory care can help partially protect margins through better efficiency and case mix optimisation but it “does not fully offset structural cost pressures”, said BIMB. “Medical inflation remains sticky, especially from wage adjustments and consumables”.

Operators with strong pricing power and a favourable case mix — such as higher-acuity or specialist procedures — are better positioned to defend margins, BIMB Securities said, adding that it favours IHH Healthcare Bhd (KL:IHH).

IHH’s diversified geographical exposure across Türkiye, Singapore and India should also help mitigate payor pressure in Malaysia and Singapore, another analyst said.

KPJ Healthcare Bhd (KL:KPJ), however, faces higher concentration risk given its heavier reliance on domestic revenue. — by Syafiqah Salim

Malaysia’s aviation sector enters 2026 with strong momentum, fuelled by the Visit Malaysia 2026 (VM2026) campaign, stable fuel prices and a strengthening ringgit.

Companies in the transportation, hospitality, healthcare and consumer sectors are well placed to catch the tailwinds from higher tourist arrivals and increased passenger traffic, MBSB Research said in its Nov 13, 2025 report.

Airlines, in particular, are expected to see an improvement in load factors in 2026. This comes at a time when aviation demand has already rebounded beyond pre-Covid-19 pandemic levels, the research house noted.

The Civil Aviation Authority of Malaysia (CAAM) projected total passenger movements of between 105.8 million and 112.9 million in 2025, surpassing the previous record of 105.3 million in 2019. With VM2026 targeting 47 million international visitor arrivals in 2026, up from an estimated 45 million in 2025, the sector is poised to chart fresh records in passenger traffic.

“VM2026 is expected to be a demand catalyst, further strengthening the recovery trajectory of airlines, airports and tourism-linked services,” MBSB Research said.

Malaysia-based airline operators such as Malaysia Airlines, AirAsia, Batik Air Malaysia and AirAsia X Bhd (KL:AAX) have been ramping up fleet sizes and network capacity to ensure supply keeps pace with the anticipated growth in demand.

Citing data from the Malaysian Aviation Commission, MBSB Research said the combined active fleet of Malaysian carriers is expected to reach 329 aircraft in 2026, up 30% from 253 planes in 2024.

Capital A Bhd (KL:CAPITALA) is expected to restore its full fleet of 255 aircraft, together with sister long-haul operator AAX, by year-end, to capture peak travel demand. Lower fuel costs and a firmer ringgit could improve airline profitability by easing cost structures.

Capital A remains a top pick for MBSB Research, which recently upgraded the stock to “buy” with a TP of RM1.26 (up from 95 sen). The revision reflects the anticipated VM2026 uplift and the group's ongoing restructuring.

Capital A is currently divesting its short-haul business to AAX, which will be renamed AirAsia Aviation Group Bhd. Post-divestment, Capital A will pivot towards five high-growth pillars: Asia Digital Engineering (maintenance, repair and overhaul), Teleport (logistics), AirAsia MOVE (travel platform), Santan (food and beverage) and AirAsia Next (brand and loyalty). — by Izzul Ikram

The outlook for Malaysia's property sector is increasingly optimistic for 2026, driven by improving earnings prospects, supportive macroeconomic conditions and strong structural growth drivers.

TA Securities is expecting a sharp 25% year-on-year rebound in earnings per share (EPS) in 2026, following an estimated 2% contraction in 2025. It will be a pivotal year for developers, who are expected to reap tangible benefits from project completions, strong launch demand and landbank monetisation, the research firm said in its 2026 Annual Strategy report on Dec 17, 2025.

The sector is further supported by a stable macroeconomic environment, with gross domestic product (GDP) projected to grow 4.5% and a benign inflation rate of 1.7%. The overnight policy rate (OPR) is expected to hold at 2.75%, enhancing mortgage affordability while lowering developers’ financing costs, it noted.

Structural growth engines continue to underpin the sector, it added, particularly the industrial segment, with sustained foreign direct investment inflows driven by global supply chain realignments under the “China + 1” strategy. Key investment corridors such as Malaysia Vision Valley (MVV 2.0) are set to gain from manufacturing spillovers.

Rising AI workloads, accelerating cloud adoption and Malaysia’s growing appeal as a regional hub for power-secured digital infrastructure also continues to drive demand. “Developers with landbanks near fibre and utility infrastructure, particularly in central Klang Valley and Johor, are well positioned to capture future data centre-led demand,” it said.

Capital recycling remains a key theme, with developers monetising mature and non-core assets through real estate investment trust (REIT) listings, joint ventures and land disposals.

The sector currently trades at 0.61 times forward price-to-book (P/B), below its long-term average of 0.65 times, offering a tactical re-entry point for investors, TA Securities said.

Mah Sing Group Bhd (KL:MAHSING) and Sime Darby Property Bhd (KL:SIMEPROP) are its sector picks — Mah Sing for its disciplined landbanking strategy and strong sales momentum, Sime Darby Property for its solid industrial exposure, healthy financials and growing contribution from recurring income streams.

MBSB Research, in a report dated Dec 12, 2025, also remained “positive on the sector as buying interest continues to be resilient, as indicated by growth in loan applications”. “We are also not overly concerned about the rise in residential overhang in 3Q2025, as overhang levels in key states remain manageable,” it said.

Its top picks are Mah Sing, Matrix Concepts Holdings Bhd (KL:MATRIX) and UOA Development Bhd (KL:UOADEV). — by Justin Lim

Malaysia’s consumer sector is set to take off in 2026, driven by the twin engines of Visit Malaysia 2026 and fiscal support under Budget 2026.

Visit Malaysia 2026 provides a clear policy tailwind, setting the stage for a tourism-led uplift in on-the-go consumption, said Kenanga Investment Bank (IB). As visitor traffic builds, food and beverage players like Fraser & Neave Holdings (KL:F&N) are set to capture stronger demand for ready-to-drink beverages, while Spritzer (KL:SPRITZER) and Life Water (KL:LWSABAH) may see gains in bottled water sales.

Convenience chains, including QL Resources (KL:QL) via FamilyMart, Mynews (KL:MYNEWS), and 7-Eleven Malaysia (KL:SEM), are primed to serve rising demand for snacks and ready-to-eat meals. Additionally, impulse purchase of ice cream under Malaysia's tropical climate will benefit Farm Fresh (KL:FFB) and Nestlé Malaysia (KL:NESTLE).

Increased footfall in tourist hubs such as Kuala Lumpur and Penang will benefit discretionary retailers such as AEON (KL:AEON), Padini (KL:PADINI) and MR DIY Group (M) Bhd (KL:MRDIY), alongside café operators like Oriental Kopi (KL:KOPI).

MBSB Research said VMY2026 will be more than just a tourism push; the campaign is set to amplify promotional spend, create events and jobs and strengthen regional connectivity — bolstering employment and household income.

Meanwhile, government’s cash aid continues to underpin household spending. The expansion of the Sara merchant network to 9,200 retailers, including 99 Speed Mart (KL:99SMART), Eco-Shop (KL:ECOSHOP) and MR DIY reinforces accessibility for essential goods.

Despite the optimism, structural hurdles persist, including cost headwinds like rising labour and input expenses, CIMB Securities flagged. Retailers are expected to counter these through tighter operational controls and selective price adjustments, though a stronger ringgit may offer relief for import-dependent players.

Kenanga IB maintained a “neutral” stance on the sector, cautioning that much of the optimism is already reflected in current valuations, so future performance will depend on strict cost discipline and earnings execution after the initial "Sara impulse" normalises. MBSB was more positive and so was CIMB, who highlighted affordability as a key driver for the year, with mass-market and staple-oriented players expected to outperform. — by John Lai

Analysts have maintained a cautiously optimistic outlook for Malaysia’s port sector in 2026, driven by a global trade resurgence and resilient container demand. Despite lingering uncertainties, Asia’s continued economic dynamism is expected to underpin steady transshipment activity in the year ahead.

RHB Research, in a December 2025 sector report, projected export growth of 9.3% in 2026, driven by (i) sustained global and regional economic expansion, (ii) developments in US tariff policies, and (iii) the resilience of electrical and electronics (E&E) exports — all of which should enhance Malaysia’s export competitiveness.

Westports Holdings Bhd (KL:WPRTS) is a primary beneficiary of this environment. RHB Research forecast that the port operator will see low- to mid-single-digit container volume growth in 2026, in line with its projected GDP growth of 4.7% for Malaysia. Westports handled 5.57 million 20-foot equivalent units (TEUs) in the first half of 2025. The outlook is further supported by Budget 2026, which introduced policies aimed at enhancing export competitiveness and providing support for port operator's operational stability, RHB Research added.

A significant catalyst for Westports is the Port Klang Authority’s staggered tariff hikes. Following a 15% tariff increase in July 2025, an additional 10% hike took place on Jan 1, 2026, with a final 5% increase on Jan 1, 2027. CGS International noted that the initial hike already boosted Westports’ core earnings to RM266 million for the third-quarter ended Sept 30, 2025, a 15% quarter-on-quarter increase.

The government is now considering a mechanism to allow port charges to be revised annually, potentially pegged to inflation, which CGS International believes would introduce greater earnings visibility and act as a re-rating catalyst for Westports. CGS International maintained an “add” on Westports, with a TP of RM6.18.

While internal policies remain supportive, analysts have warned of external risks. These include the lagged effects of global trade tariff changes, geopolitical tensions and the potential for a sharper-than-expected decline in external demand. Implementation and volume risks linked to evolving global trade policies also remain key concerns.

Beyond ports, RHB Research preferred logistics players like Tasco Bhd (KL:TASCO), naming it a top pick due to its diversified and stable earnings and tax incentives. It has Tasco on “buy”, with a TP of 70 sen. — by Isabelle Francis

Malaysia’s financial sector enters 2026 with a more measured expansion outlook after a volatile year following global trade uncertainties and shifting domestic policies.

Analysts are anticipating a slight moderation in loan growth, with Kenanga Investment Bank projecting an expansion of 5.0%-5.5%, down from 5.5% in 2025. Despite this softer momentum, Hong Leong Investment Bank forecasts steady profit growth of 5.4% over the next two years.

The primary challenge for banks stems from the July 2025 interest rate cut — the first in over two years. This squeezed net interest margins (NIMs) as loan yields repriced faster than funding costs.

Assuming the OPR holds at 2.75%, analysts expect NIMs to fully reprice and stabilise by the second quarter of 2026.

Despite margin pressure, asset quality remains resilient. The industry's gross impaired loans eased to a record low of 1.39% as of October 2025, supported by a robust loan loss coverage of 90%, surpassing the 82% level recorded at the onset of Covid-19. Large-cap banks like Malayan Banking Bhd (KL:MAYBANK), CIMB Group Holdings Bhd (KL:CIMB), Public Bank Bhd (KL:PBBANK) and RHB Bank Bhd (KL:RHBBANK) remain attractive to investors due to high dividend yields. Valuations are largely inexpensive too. Large-cap banks are also seen as prime beneficiaries of potential foreign inflows.

Lower interest rates create a more cost-friendly environment for non-bank lenders, though prospects vary.

Aeon Credit Service (M) Bhd (KL:AEONCR) maintains loan growth above its 10% target, driven by motorcycle financing, though moderation is expected as it prioritises credit quality. Meanwhile, asset quality risks persist amid weaker macro conditions, while higher provisions have dragged return on equity to 10.5%, below its 12% target, while losses from its digital banking venture continue to weigh.

RCE Capital Bhd (KL:RCECAP), which specialises in civil servant financing, saw a rise in non-performing loans to 4.8% due to early retirements and bankruptcies. It has tightened disbursements to manage risk, and expects momentum to pick up from January 2026, aided by a 7% civil service salary hike.

Pawnbrokers like Well Chip Bhd (KL:WELLCHIP), Pappajack Bhd (KL:PPJACK) and Evergreen Max Cash Capital Bhd (KL:EMCC), by contrast, are thriving due to record gold prices. Strong gold values have encouraged pledge redemptions, freeing up liquidity for new disbursements while keeping default rates low. — by John Lai