KUALA LUMPUR (Feb 20): CIMB Securities said foreign investors remain underweight on Malaysian equities due to concerns over corporate earnings delivery, but it is maintaining its FBM KLCI target of 1,772.

In a note on Friday, the research house said the earnings concerns — following past disappointments — continue to weigh on foreign investors' sentiment, amid higher operating costs, increased taxes, US import tariffs and ongoing industry challenges.

“Overall, domestic investors are more positive on the market than foreign investors, who remain underweight on Malaysian equities,” CIMB said.

The firm said it is keeping its 1,772 target as it remains constructive on local equities, supported by expectations of stronger corporate earnings, a firmer ringgit and the potential for a pre-16th general election rally. It noted that the KLCI delivered positive 12-month returns ahead of elections in three of the past four polls, with banks, consumer and industrial stocks typically benefiting.

The FBM KLCI edged up 0.72 points, or 0.04%, to close at 1,752.38 on Friday. Year to date, the benchmark index has risen 4.33%.

CIMB added that there had been no significant pushback on its 'overweight' call on banks.

Apart from banks, investors showed interest in SD Guthrie Bhd (KL:SDG) and Kuala Lumpur Kepong Bhd (KL:KLK) on land monetisation plans and crude palm oil price prospects, IJM Corp Bhd (KL:IJM) on the takeover offer by Sunway Bhd (KL:SUNWAY), Tenaga Nasional Bhd (KL:TENAGA) on tax updates, property stocks on attractive valuations, and Gamuda Bhd (KL:GAMUDA) following its recent share price weakness, said CIMB.