Kuala lumpur: RHB Investment Bank Bhd (RHB IB) has indicated that Malaysia's energy sector continues to be viewed as a defensive option in the face of ongoing geopolitical tensions, which could potentially lead to a risk-off mode in the market.

According to BERNAMA News Agency, the investment bank highlighted that large-cap utilities such as Tenaga Nasional Bhd (TNB) and Petronas Gas Bhd (PTG) are minimally exposed to non-domestic risks. These risks include fuel costs, operations outside Malaysia, regulated fuel costs, and foreign exchange fluctuations. The regulated frameworks in place provide stable earnings with dividend yields ranging from 4 to 5 percent.

RHB IB also noted that YTL Power International Bhd (YTLP) might benefit from rising gas prices, which could lead to higher spark spreads. The investment bank emphasized that the cost pass-through mechanism for TNB and PTG's regulated businesses ensures that fluctuations in costs do not impact earnings negatively. RHB IB expressed a preference for TNB, YTLP, and PTG in a risk-off environment.

In contrast, Hong Leong Investment Bank Bhd pointed out that TNB is well protected against geopolitical tensions. The bank elaborated that TNB is expected to see stronger financial results in the fiscal years 2026 and 2027, driven by increasing electricity demand owing to Malaysia's steady economic growth and the rapid expansion of data centers. The bank also mentioned that earnings visibility is bolstered by an expanding regulated asset base, supported by contingent capital expenditure of RM3.7 billion in FY2026 and RM7.6 billion in FY2027 following the finalization of its new return mechanism.

As of 10:30 am, TNB shares rose by 20 sen to RM14.04, with 1.05 million shares traded. PTG shares increased by 30 sen to RM17.48, with 45,800 shares traded, and YTLP shares went up by 12 sen to RM2.71, with 2.62 million shares traded.