This article first appeared in Capital, The Edge Malaysia Weekly on January 26, 2026 - February 1, 2026

THE ringgit’s strength could enliven the upcoming corporate earnings reporting season as investors watch for companies that are sitting prettier than others and have the capacity to be more generous with the final dividend.

The ringgit strengthened about 10% against the US dollar (USD) in 2025 to hover around the 4.05 level currently.

Some experts say the impact from the local currency’s strength on earnings will be more apparent this year.

“As the ringgit strengthened notably in the fourth quarter of 2025, we shall see the impact on the earnings of companies in that quarter (4Q2025), especially those that did not engage in foreign exchange hedging,” says Fortress Capital Asset Management CEO Datuk Thomas Yong.

Yet others, including AmInvestment Bank Bhd’s head of equity research Paul Yap, opine that companies are already feeling the impact, given that the ringgit had been strengthening against the greenback since 2Q2025.

“However, in certain cases, the impact may not be immediate because companies typically have inventory already bought at older foreign exchange rates, hedging contracts that roll off over time and, in some sectors, selling prices are reset only periodically,” Yap explains.

Tracking the ringgit’s movement on a quarterly basis, the appreciation against the USD was in fact the steepest in 2Q2025, as it climbed about 5.3% against the greenback from 4.4342 to 4.2095.

In 4Q2025, the ringgit appreciated 3.6% against the USD from 4.207 to reach 4.06 by year end.

With the ringgit hovering at its highest in at least four years, and the bellwether FBM KLCI surging above 1,700 points to its highest in at least seven years, it is perhaps only natural to wonder just how much more the ringgit will strengthen this year and if it could provide further tailwind to certain companies while being a headwind for others.

Beneficiaries of a stronger ringgit include those with costs denominated in foreign currencies, which Yong says should include sectors like airlines, automotives, construction, healthcare and consumer products.

“The common thread is lower USD-linked costs: autos have high import content (CBU/CKD kits and parts), airlines pay for jet fuel in USD and media groups often source content in foreign currency. Ringgit appreciation can lift margins unless savings are quickly competed away via price cuts,” says AmInvestment’s Yap.

Further, companies with sizeable foreign currency debt should also feel some relief from the ringgit strength.

“Firms with USD borrowings but mainly ringgit revenues benefit as the ringgit cost of servicing and translating that debt falls, improving reported earnings and leverage, subject to hedging and natural USD revenue offsets,” adds Yap.

In a strategy report dated Dec 9, 2025, CGS International Securities said the ringgit’s appreciation should be positive for Corporate Malaysia. It highlighted that around 85% of its coverage earnings are linked to domestic demand while import content cost also exists on the other side of the equation.

In other words, it is positive for companies that incur USD-denominated cost but derive the bulk of their revenue in ringgit, noted the research house.

Besides the sectors mentioned earlier, other sectors that CGS International thinks should benefit from the ringgit’s strength are building materials, plantation (from fertiliser cost) and telecommunications — in terms of its capital expenditure on equipment that is usually priced in USD.

Among the potential beneficiaries of the ringgit’s strength, CGS International is overweight on the agribusiness sector, consumer discretionary, construction and healthcare, and neutral on automotive, consumer staples and telecommunications.

Top picks within the overweight agribusiness sectors include Hap Seng Plantations Holdings Bhd (KL:HSPLANT) for being the most cost-efficient, with higher crude palm oil (CPO) average selling price (ASP) compared to its peers; and SD Guthrie Bhd (KL:SDG) as it has the largest planted area among peers that would benefit from higher CPO ASP.

Meanwhile, the research house also likes Mr D.I.Y Group (M) Bhd (KL:MRDIY) and MyNews Holdings Bhd (KL:MYNEWS) in the consumer discretionary space. It expects fewer policy reforms and less cost shocks on businesses in 2026 compared to 2025. It adds that some consumer discretionary stocks under its coverage, such as Mr DIY, have up to 45% of their cost denominated in foreign currencies with minimal foreign sales, meaning that they would benefit from a stronger ringgit in 2026.

It also likes Duopharma Biotech Bhd (KL:DPHARMA) as a beneficiary of increased budget spending by Malaysia’s Ministry of Health — in terms of revenue from the local public sector, which makes up 52% of its FY2025 forecast revenue — while it stands to benefit from higher margins from the strengthening ringgit against the greenback and lower raw material costs.

Notably, UOB Kay Hian Research’s 1H2026 strategy report also highlighted Duopharma as one of its notable “buy” calls with near-term catalysts on account of being a strong ringgit beneficiary. It has a target price of RM1.67 on the stock, implying a 34.7% upside to its closing price of RM1.24 last Thursday.

The other “buy” call with a near-term catalyst for being a strong ringgit beneficiary is Eco-Shop Marketing Bhd (KL:ECOSHOP). 

About half of Eco-Shop’s cost of goods sold are imported from China. The ringgit also appreciated around 5% against the yuan in 2025.

In a separate report on the consumer sector dated Jan 15, UOB Kay Hian Research highlighted that for every 1% change in the ringgit compared to the yuan, Eco-Shop could benefit by 3.5%, all else being constant.

While some sectors stand to gain from the ringgit’s strength, there are also potential losers from currency appreciation. CGS International Research says these would be companies that generate revenue in USD but do not have a meaningful proportion of costs denominated in USD to provide a natural hedge.

The latter includes export-oriented sectors such as gloves and technology companies, where the bulk of their revenue is in USD whereas USD-denominated cost is only around 30% to 40% of total cost. The same goes for companies in the petrochemicals sector, where the top line is mainly in USD while its USD-denominated cost sits at half of the total cost.

The research house has an “underweight” call on gloves, petrochemicals and the technology sectors.

Companies with a low profit margin could be especially vulnerable to currency fluctuations, especially if they do not hedge foreign exchange exposures, Fortress Capital’s Yong notes.

While the impact of a stronger ringgit can be meaningful to the earnings of such companies, Yap reckons that it is also very situation-specific.

“The biggest impact is on exporters, for whom revenues are largely USD-linked, while a meaningful portion of the cost base is in ringgit. Importantly, the magnitude also depends on the industry’s demand-supply dynamics, which determines how quickly and how much they can pass through pricing versus having to absorb the foreign exchange impact,” explains Yap.

One price-sensitive sector that has been highlighted to feel the strain from the appreciating ringgit is the glove sector, as it faces depressed ASPs due to a supply glut.

The glove sector has been having several difficult years post-euphoria during the Covid-19 pandemic. With issues of overcapacity plaguing the industry and Chinese manufacturers exerting their reach into Southeast Asia, the glove sector has found it difficult to recover meaningfully.

“Current estimates indicate that China may add approximately 60 billion to 80 billion pieces of new capacity outside of China in the coming years. As a result, any meaningful recovery is unlikely before end-2027. The global oversupply would keep customers highly price sensitive,” says TA Securities in its sector report dated Jan 19. It has an “underweight” call on the glove sector.

The research house also says the strengthening of the ringgit is negative for Malaysian glove exporters, as passing on the higher costs is difficult in the midst of strong customer resistance while a wide range of alternatives are available. Its sensitivity analysis indicates a 4.2% negative impact on earnings for every five sen appreciation of the ringgit against the USD.

TA Securities has a “buy” call on Kossan Rubber Industries Bhd (KL:KOSSAN) with a target price of RM1.30, “hold” calls on Hartalega Holdings Bhd (KL:HARTA) and Supermax Corp Bhd (KL:SUPERMX) with target prices of RM1.07 and 35 sen respectively. Its only “sell” call in the sector is on Top Glove Corp Bhd (KL:TOPGLOV) with a target price of 62 sen.

With the ringgit hovering at 4.04 against the USD at the time of writing, some analysts continue to be bullish, forecasting the ringgit to appreciate further and break the 4.0 barrier. However, most believe that the ringgit will trade sideways from here on, with forecasts ranging between 4.0 and 4.10.

“Apart from sound fundamentals in economy and exports, the ringgit’s strength has been boosted by the weakness in the USD. With the expectation of continued loose monetary policy in the US, the ringgit is likely to maintain current strength,” notes Yong.

Economists have pointed out that geopolitical and monetary policy uncertainties have weighed down the greenback, implying that USD weakness could remain.

However, some also opine that any depreciation in the USD will be “modest” and not as steep as what took place in 2025.

Furthermore, depending on the direction of US Federal Reserve monetary policy this year — which could be influenced by higher inflation on account of potential weakness in consumer spending as the impact of tariffs creeps in — it could result in a change in movement of the USD.

Yap says while the ringgit move is important, it is just a secondary factor in investment decisions.

“Forex can swing near-term earnings, but the effect is often temporary as hedges roll, contracts repriced and competition forces pass through. Over time, share prices are driven more by fundamentals like pricing power, cost structure and execution,” he points out.

With the local bellwether index scaling new heights and a stronger ringgit lifting sentiment, this should set the stage for an interesting reporting season. 

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.