Kuala lumpur: HSBC Private Bank and Premier Wealth has projected a year-end target of 1,850 points for the FTSE Bursa Malaysia KLCI (FBM KLCI), suggesting a potential 10% increase from current levels. Desmond Kuang, the incoming chief investment officer for Asia, noted that while the bank remains neutral on Malaysian equities, there is potential for the benchmark index to rise.
According to BERNAMA News Agency, Kuang highlighted that the expected growth would primarily stem from corporate earnings rather than valuation gains, as the Malaysian equity market is currently trading within its historical range of around 15 times earnings. During HSBC's third quarter 2026 investment outlook session, he emphasized the role of energy-related counters, given Malaysia's oil and chemical exposure, and opportunities from the artificial intelligence (AI) trade, including data center expansion and the semiconductor supply chain.
Kuang also stated that HSBC maintains its full-year 2026 GDP growth forecast for Malaysia at 4.5%. He attributed the modest domestic inflation to generous subsidies, which have kept petrol prices stable. Malaysia's GDP grew by 5.4% year-on-year in the first quarter, down from over 6.0% in the fourth quarter of 2025, which Kuang considered a normalization rather than a momentum loss.
On international matters, Kuang remarked that the ongoing West Asia conflict highlights Malaysia's position as an energy exporter. Malaysia, while a modest net crude oil importer, is a significant net exporter of natural gas, which positions it advantageously amid external volatility. He added that resilient domestic GDP growth and stable corporate earnings are supporting the Malaysian equity market.
Regarding the investment outlook for Asia, Kuang mentioned that as global investment in AI increases, Asia stands to benefit due to its leadership in semiconductors and advancements in large language models. He noted that beyond AI, investors could explore income potential in bonds and improvements in corporate governance reforms across Japan, South Korea, mainland China, and Singapore.
Dr. Mohd Iqbal Mohd Noor, a senior lecturer at Universiti Teknologi MARA (UiTM), stressed the importance of strengthening Malaysia's corporate governance standards. He pointed out that investment competition is moving towards higher-value sectors like AI, data centers, and advanced manufacturing. Iqbal emphasized that strong corporate governance reduces perceived investment risk and boosts investor confidence in protecting long-term capital.
Iqbal concluded that improved corporate governance could help Malaysia attract not only more foreign investment but also higher-quality investments that bring technology transfer, skilled employment, and stronger local industry involvement.