Kuala lumpur: Rakuten Trade has revised its forecast for the FTSE Bursa Malaysia KLCI (FBM KLCI) slightly lower at 1,800 for 2026 from 1,810 previously in view of the overhanging uncertainty. Rakuten Trade head of research Kenny Yee said market performance will largely depend on the duration of the US-Iran war and its impact on crude oil prices.
According to BERNAMA News Agency, Yee stated that despite Donald Trump's confidence that the war will be short, it is expected to be prolonged. He emphasized that the duration of the conflict is uncertain, but it will not be a brief one or two-month affair. This was conveyed during a virtual media briefing on the second quarter of 2026 market outlook.
Yee highlighted the potential financial implications, noting that the US-Iran conflict might cost the US approximately US$1 billion per day. If the war extends, Brent crude prices could surge beyond US$100 per barrel, negatively affecting global economic progress. Consequently, Rakuten Trade anticipates a fluctuating scenario for Asian markets over the next one to two months.
Bursa Malaysia opened on a lower note on Friday, following Wall Street's overnight losses after Iran's new supreme leader indicated that the Strait of Hormuz would remain closed. As of 9.05 am, the FBM KLCI dropped 10.82 points, or 0.63 per cent, settling at 1,700.19 from Thursday's close of 1,711.01.
Yee also addressed the year-to-date foreign fund flows, noting a solid performance with net inflows of RM1.28 billion. He credited local institutions and foreign funds for supporting the index's current levels, though he expressed concern over continued outflows in the retail segment.
Yee projected a 7.9 per cent earnings growth for corporate Malaysia this year, primarily due to a lower base in 2025, and introduced a 6.5 per cent earnings growth forecast for 2027. For 2026, he anticipates foreign shareholding to improve, reaching between 25 and 30 per cent. He cited the ringgit's strength against the US dollar as a key factor that could attract foreign investment back into the market.
Thong Pak Leng, vice-president of equity research, provided sector-specific forecasts. For the automotive sector, Rakuten Trade predicts a total industry volume (TIV) of 750,000 units in 2026, considering softening consumer sentiment and persistent inflationary pressures. In the banking sector, earnings are expected to remain resilient with projected loan growth of around five per cent, supported by a stable overnight policy rate of 2.75 per cent and a steady net interest margin of approximately 2.1 per cent.
In the oil and gas sector, Thong noted that Brent crude prices have exceeded US$100 per barrel, with potential to reach US$150 per barrel if the Strait of Hormuz remains restricted. Companies with high operating leverage to crude prices or those providing essential storage and shipping services are likely to benefit.
Lastly, for the plantation sector, Thong expects crude palm oil to average RM4,500 per tonne in the second quarter of 2026, driven by rising commodity prices.