PETALING JAYA: Analysts generally expect the third quarter of financial year 2026 (3Q26) to be a period of consolidation for Malaysian equities, with investors likely to shift from broad market bets to selective sector rotation as economic growth moderates and external uncertainties linger.
Against this backdrop, Kenanga Research believes stock picking will be the key to generating returns, while maintaining its year-end target of 1,770 points for the FBM KLCI on expectations that market reforms and an expansionary Budget 2027 will provide stronger catalysts in 4Q26.
“Our year-end 1,770 FBM KLCI target price is thus unchanged, with the belief also that the market will start to firm on an expansionary Budget 2027 (by October),” it said, while cautioning that an earlier-than-expected general election remains a potential source of market volatility.
In its latest 3Q26 strategy report, the research house said the market is likely to trade sideways over the coming months as Malaysia enters a period of milder year-on-year gross domestic product growth following a stronger first half (1H26).
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