(Bloomberg) — Malaysia’s spending plan for 2026 will be mildly positive for local assets given the absence of negative surprises, according to analysts.
A boost in cash handouts will benefit consumer firms, while allocations to strategic sectors such as semiconductors, clean energy, and digital transformation will help develop businesses across value chains. Analysts are also optimistic over the government’s plan to reduce the fiscal deficit to 3.5% of gross domestic product from 3.8% in 2025.
The stock benchmark has declined 1.2% this year as of Friday, while the ringgit has gained 5.8% against the dollar.
Read: Here Are The Winners and Losers of Malaysia’s 2026 Spending Plan
Here’s what analysts are saying about next year’s budget:
CIMB Securities (analysts including Ivy Ng)
“We expect the equity market’s reaction to Budget 2026 to be mildly positive, given the absence of negative surprises or new tax measures that could raise business costs in 2026.”
“Overall, Budget 2026 is positive for the construction, technology, and consumer sectors. We maintain our KLCI target of 1,605 points. Among our Overweight sectors, the construction and consumer sectors are expected to benefit the most, while the property, brewers, and tobacco sectors may see mild negatives.
Citigroup Inc. (analysts including Megat Fais)
“We see the Budget 2026 as neutral/slight ve for the equity market. However, the recent rally could cap upside, especially with tariff risk re-escalating recently”
Relative winners include tourism and the renewables sector, with relevant stocks including that of airlines, Genting Malaysia and hospitality-centric REITs. Relative losers include tobacco/beverages given an increase in excise tax which could results in higher prices and hamper demand. The introduction of carbon tax will see higher costs for carbon intensive sectors.
UOB Group (Julia Goh and Loke Siew Ting)
“Budget 2026 is viewed as a responsible and well-calibrated fiscal plan, with macro projections generally more conservative than market expectations”
The growth outlook continues to be anchored by resilient domestic demand, supported by wage-related initiatives, ongoing cash handouts, capital expenditures particularly in high-growth and high-impact strategic sectors such as semiconductor, renewable energy and data centers, and robust tourism activities
Services, manufacturing and construction sectors remain key growth engines in 2026. Key infrastructure and utilities projects, such as the ASEAN Power Grid, are expected to drive investment momentum.
Fitch Ratings (Kathleen Chen)
“The latest budget reaffirms a commitment towards gradual fiscal consolidation, targeting a deficit of 3.5% of GDP in 2026 — slightly below our previous forecast of 3.6%.” Government debt is gradually coming down but is still above the median for Fitch-rated ‘BBB’ category sovereigns of 58% in 2025.
CIMB Bank (strategists including Michelle Chia)
“Net borrowings will decline slightly in 2026 on the back of further fiscal consolidation.” Due to heavier bond maturities next year, gross issuances is forecast to be between 173 to 178 billion ringgit relative to the estimated gross supply of 170.5 billion ringgit this year.
–With assistance from Eduard Gismatullin and Marcus Wong.
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