logo
In search of opportunities amid Mideast, tariff uncertainties

In search of opportunities amid Mideast, tariff uncertainties

From a macro perspective, Maybank IB expects attention in 2H25 to be focused on cross currents of external headwinds amid domestic tailwinds
THE second half of 2025 (2H25) might be more tumultuous, if not even more fluid compared to the 1H.
'Recent Middle Eastern conflicts coupled with ongoing tariff negotiations and supply chain disruption, plus domestic policy changes are expected to shift sands in 2H25,' according to Maybank Investment Bank Bhd (Maybank IB) in a strategy report.
It has kept its year-end FTSE Bursa Malaysia's Kuala Lumpur Composite Index (FBM KLCI) target at 1,660 points, which is 14.4 times 2026E price earnings ratio, which is its base case and assumes further de-escalation in trade tensions and favourable tariff negotiations.
In the report dated June 22 entitled: 'Shifting sands: Malaysia 2H25 Outlook & Lookouts', Maybank IB has added SD Guthrie Bhd and Westports Holdings Bhd as its tactical picks, and reaffirmed YTL Power International Bhd and Gamuda Bhd as its data centre conviction thematic plays.
It has also further added Sunway Construction Group Bhd and MN Holdings Bhd as activities pick up. Its top picks were Public Bank Bhd, AMMB Holdings Bhd, Tenaga Nasional Bhd (TNB), YTL Power, Gamuda, KPJ Healthcare Bhd, Farm Fresh Bhd, Solarvest Holdings Bhd and Pavilion Real Estate Invest- ment Trust (REIT).
In the technology space, the report noted that its selective picks remained Frontken Corp Bhd, ITMax System Bhd and Aurelius Technologies Bhd.
From a macro perspective, Maybank IB said it expected attention in 2H25 to be focused on cross currents of external headwinds amid domestic tailwinds, which when combined, should still offer upside to the equities market albeit more selective.
'Our five themes are intact and remain well in progress. We reiterate our 'Neutral' stance on the banks, leveraging on the softer 2H25 macro outlook, but stress that there could be upside to our forecasts should banks decide to use management overlays to buffer credit costs — Public Bank and AMMB Holdings, our bank picks, are well positioned for this.
'Elsewhere, we remain positive on domestic-centric consumer plays as we expect domestic policy tailwinds to keep the Malaysian economy on a growth path,' it said.
Besides the consumer sector, the report said Maybank IB remained 'Positive' on healthcare, REITs and renewable energy (RE).
For 2H25, it has raised its conviction for the construction sector amid build-up in activities within the data centre space. Besides REITs, other defensive picks such as Telekom Malaysia Bhd (TM) and TIME dotCom Bhd are among telcos that fit the theme.
Given current circumstances with heightened external uncertainties, it said it had flagged additional three sector thematics to explore for the rest of the year — plantations, utilities/RE and ports.
Mideast Conflict
The Middle Eastern conflict has triggered oil prices surge and indirectly crude palm oil (CPO) price bounce, though this could be temporary.
While its expected CPO prices to end the year at RM4,000 per tonne, only a sustained level above RM4,500 per tonne could be a surprise for planters on the upside. Regardless, it said SD Guthrie would be the best proxy for the planters.
Separately, as the National Energy Transition Roadmap (NETR) continues to track well, it said awards for RE, battery energy storage systems (BESS) and carbon capture, utilisation and storage (CCUS) abound.
Apart from TNB, it noted that MN Holdings was well-positioned to benefit from BESS contracts.
Lastly, it noted that as ports face congestions amid tariff and Middle Eastern concerns, it expected to see storage rates surge. Coupled with higher tariff rates with effect from July 1, Westports stands out as a beneficiary.
'We believe there should be a resolution to tariff issues though with a timing risk. As we write, the Malaysian government is still in negotiation with the US on reciprocal tariffs (link).
'A further risk that could arise from here is the extended Middle Eastern tensions. Softer 2H25 macro and any market weakness would offer investors an opportunity to accumulate stocks, especially the banks, which we believe stand out as long-term winners,' it said.
Separately, it noted that the tech sector remained at crossroads, hence it selectively liked Farm Fresh and Greatech Technology Bhd in the semicon space and Aurelius Technologies among electronics manufacturing services (EMS) plays.
Fiscal Reforms
The 92-page report also discussed the fiscal focus in 2H25. Here, it pointed out that the focus was on the rollout of fiscal reforms and tax measures outlined in Budget 2025, namely RON95 petrol subsidy rationalisation, Sales and Services Tax (SST), e-invoice and stamp duty.
'The overhang in the implementation of the targeted RON95 petrol subsidy rationalisation remains,' it said.
It noted that it appeared that the official statements on the execution timing, responsibility and scope have changed from mid-year to 2H25. Another change was from the exclusion of the top-15% (T15) income group to exclusion of the top-5% (T5) income group in terms of RON95 fuel subsidy eligibility — while maintaining the exclusion of foreigners.
'However, it is also worth noting that the government is incurring savings in fuel subsidies thanks to the drop in crude oil prices as well as firmer ringgit versus the US dollar,' it said.
It noted that the Budget 2025 allocation for fuel subsidies was based on the average (Brent) crude oil price assumption of US$75 (RM319.50)-RM80 per barrel versus US$72 per barrel year-to-date (YTD).
'We currently expect crude oil price to average US$67 per barrel this year, although the outbreak of Israel-Iran conflict poses upside risk to this outlook,' it said. — TMR
This article first appeared in The Malaysian Reserve weekly print edition

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Malaysia no longer just competing but leading: Industry chief
Malaysia no longer just competing but leading: Industry chief

New Straits Times

timean hour ago

  • New Straits Times

Malaysia no longer just competing but leading: Industry chief

KUALA LUMPUR: Malaysia's rise in the IMD World Competitiveness Ranking 2025 reflects the tangible outcomes of strategic and productivity-driven reforms, with the pharmaceutical sector emerging as a standout contributor to the success. Pharmaceutical Productivity Nexus (PPN) champion and Malaysian Organisation of Pharmaceutical Industries president Ch'ng Kien Peng said Malaysia is no longer just competing but leading. Ch'ng said the pharmaceutical sector's gains reflect what is possible when productivity reforms are targeted, data-driven and collaborative. "These wins go beyond industry metrics; they mean better access to affordable medicines, more quality jobs for Malaysians, and increased resilience in our healthcare supply chain," he said in a statement. Under Malaysia Productivity Corporation (MPC), the PPN has driven structural changes that translate directly into economic value. These include streamlining product registration processes, aligning technical requirements across agencies and reducing regulatory bottlenecks. As a result, the corporation said two new pharmaceutical facilities have successfully moved to development, unlocking millions in investment and new job opportunities. "Two additional facilities are progressing more rapidly, thanks to reduced duplication and stronger agency coordination. "Approval timelines have been shortened, giving Malaysian firms a competitive edge in time-to-market," it said. MPC director general Datuk Zahid Ismail said the sector's transformation offers a blueprint for national economic renewal. "Every bottleneck removed is an opportunity unlocked whether it's faster factory approvals, increased export readiness, or local production of critical medicines. "This is productivity with purpose, and its effects are measurable," said Zahid. To sustain and scale these results, MPC urged the industry to continue investing in automation, digitalisation and skills development. In addition, the government should accelerate mutual recognition agreements, innovation incentives and seamless inter-agency frameworks, it said.

RTS Link Ticket Fares To Be Announced Closer To Launch
RTS Link Ticket Fares To Be Announced Closer To Launch

Barnama

timean hour ago

  • Barnama

RTS Link Ticket Fares To Be Announced Closer To Launch

By Nur Ashikin Abdul Aziz SINGAPORE, June 30 (Bernama) -- The operator of the Johor Bahru-Singapore Rapid Transit System (RTS) Link is conducting a final market study to determine ticket fares, with the final pricing and fare mechanism to be announced closer to the service's launch, Malaysia's Transport Minister Anthony Loke said on Monday. 'We hope that the right price mechanism is in place to ensure that it can encourage more people to use the RTS service. bootstrap slideshow 'The whole idea of this project is to make the modal shift, to ensure that more people use public transport to cross the Causeway,' he said at a joint press conference with Singapore acting Transport Minister Jeffrey Siow, after unveiling the first of the eight RTS Link train sets at the Singapore Rail Test Centre (SRTC) here. The event was also attended by Johor Menteri Besar Datuk Onn Hafiz Ghazi. RTS Operations Pte Ltd (RTSO), a joint venture between Prasarana RTS Operations Sdn Bhd and SMRT RTS Pte Ltd, is the operator of the RTS Link, a cross-border rail connecting Malaysia and Singapore. Loke said the Malaysian government was pushing for a more open payment system, in line with global public transport trends, which would allow commuters to use multiple modes of payment. Singapore's Siow said fares should be determined commercially by RTSO, taking into account demand and supply, as well as costs. Meanwhile, Loke said RTSO would also finalise the operating hours for the train service, which links Bukit Chagar in Johor Bahru to Woodlands North in Singapore, by taking into account early commuters.

Prime Minister Anwar embarks on three-nation visit starting Tuesday
Prime Minister Anwar embarks on three-nation visit starting Tuesday

Malaysian Reserve

timean hour ago

  • Malaysian Reserve

Prime Minister Anwar embarks on three-nation visit starting Tuesday

KUALA LUMPUR – Prime Minister Datuk Seri Anwar Ibrahim (picture) will undertake a series of visits to three countries – Italy, France, and Brazil – beginning July 1. This series of visits by the Prime Minister, beginning with a three-day official visit to Italy starting Tuesday, forms part of Malaysia's ongoing efforts to strengthen bilateral relations and promote economic cooperation at the global level. Malaysia's Ambassador to Italy, Datuk Zahid Rastam, noted that the Prime Minister's inaugural visit to Italy is being undertaken at the invitation of Italian Prime Minister Giorgia Meloni. 'This visit is expected to further strengthen bilateral relations between Malaysia and Italy across a wide range of sectors. It also reflects the government's commitment to exploring new initiatives in trade and investment, as well as cooperation in the fields of defence, energy, and agro-commodities,' he told reporters in Malaysia via Google Meet from Rome on Monday. According to Wisma Putra, the Prime Minister will attend the BRICS Summit in Rio de Janeiro, Brazil, as a partner country in the bloc comprising Brazil, Russia, India, China, and South Africa. Zahid stated that during the official visit to Italy, the Prime Minister will be accompanied by five Cabinet ministers: Foreign Minister Datuk Seri Mohamad Hasan, Transport Minister Anthony Loke, Agriculture and Food Security Minister Datuk Seri Mohamad Sabu, Defence Minister Datuk Seri Mohamad Khaled Nordin, and Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz. Also part of the delegation is Deputy Minister of Energy Transition and Water Transformation, Akmal Nasrullah Mohd Nasir. According to Zahid, the Prime Minister will also be accompanied by relevant senior government officials and a corporate delegation comprising representatives from 13 Malaysian companies across various sectors. He said the Prime Minister and his delegation are expected to arrive at Fiumicino Airport in Rome at approximately 7.50 pm on Tuesday, July 1, and that he is scheduled to host an engagement session with the Malaysian diaspora in Italy later that evening. On Wednesday, July 2, the Prime Minister will participate in a roundtable meeting with leading figures from Italian and Malaysian industries, in an event jointly organised by the governments of Malaysia and Italy known as the Malaysia–Italy Economic Partnership Roundtable, he said. He added that the roundtable meeting will involve more than 50 companies, associations, and industry representatives from both Malaysia and Italy. On the same day, the Prime Minister will hold meetings with Imam Yahya Pallavicini, Vice President of the Comunita Religiosa Islamica Italiana (COREIS), and Abdellah Redouane, Secretary-General of the Islamic Cultural Centre of Italy and the Mosque of Rome. According to Zahid, on Thursday, July 3, the Prime Minister will be interviewed by Rai News 24, a leading and influential television news network in Italy. In the interview, the Prime Minister is expected to speak on bilateral relations between Malaysia and Italy, trade and investment matters, as well as Malaysia's role as Chair of ASEAN 2025, he said. He further said that at midday on July 3, Anwar is scheduled to hold a bilateral meeting with Italian Prime Minister Giorgia Meloni at Palazzo Chigi. During the meeting, both sides will discuss a range of issues encompassing bilateral cooperation in economic sectors such as trade and investment, as well as collaboration in defence, renewable energy and the environment, agro-commodities, and the digital sector. Zahid added that the discussions will also cover people-to-people cooperation, including education, cultural exchanges, the tourism sector, as well as regional and international issues of mutual concern, such as the situation in the Middle East. He noted that the Prime Minister's visit to Italy is highly significant in reflecting the close ties between the two countries. During the visit, both leaders will reaffirm their countries' commitment to strengthening bilateral relations through more comprehensive cooperation. Accoarding to Zahid, the visit would provide the mandate and momentum to elevate Malaysia–Italy bilateral relations towards a more strategic partnership in the future. He said the visit as a whole will serve as a platform for the Prime Minister to articulate Malaysia's foreign policy, particularly the country's stands on regional and global issues on the international stage, while also highlighting Malaysia's current ASEAN Chairmanship. Zahid highlighted that in 2024, total trade between Malaysia and Italy amounted to RM14.61 billion, with Malaysian exports to Italy valued at RM6.71 billion and imports from Italy totalling RM7.89 billion. Overall, Italy is Malaysia's fifth-largest trading partner among European countries. — BERNAMA

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store