Budget 2025 Aims For Growth And Elevated Living Standards - Analysts

KUALA LUMPUR, Oct 21 (Bernama) -- The measures outlined in Budget 2025 aim to reshape the economy by fostering growth and attracting quality investments while balancing fiscal consolidation, "raising the ceiling" for economic growth, and "raising the floor" to elevate living standards, according to analysts.

Maybank Investment Bank Bhd (Maybank IB) regards the Budget 2025 measures as ‘neutral,’ with no significant negative surprises anticipated for equities. 

"We make no changes to our 2024 year-end KLCI target of 1,720, based on mean valuation.

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“We also maintain our preliminary 2025 year-end KLCI target of 1,840, as we look to firm up this target following the third-quarter 2024 results reporting in late November," the bank stated in a note today.

Maybank IB has also made no adjustments to its sector calls, maintaining an ‘overweight’ stance on banks, construction, consumer goods, gaming, oil and gas, real estate investment trusts (REITs), renewable energy and technology software and electronics manufacturing services.

Meanwhile, Public Investment Bank Bhd (PIVB) believes that while Budget 2025 appears positive, reflecting the government’s commitment to fiscal reform and stable development expenditure, its impact on the market may be muted.

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PIVB noted that the construction sector should benefit from a mix of mega and smaller projects in the pipeline to keep contractors engaged. However, it believes that the rollout of larger projects—such as flood mitigation and railways—will depend on funding arrangements that are yet to be finalised, particularly concerning public-private partnerships.

The anticipated increase in the minimum wage, while largely expected, is likely to adversely affect the plantation sector. 

"We recommend accumulation in the market on weakness. Our year-end FBM KLCI target remains at 1,750 points, based on long-term mean reversion to 16 times calendar year 2024 earnings," PIVB stated in its note.

Another investment bank, RHB Investment Bank Bhd (RHBIB), anticipates that the Budget 2025 proposals will be broadly neutral for markets. 

It noted that Bursa Malaysia’s relative outperformance suggests that aggressive window dressing activity is unlikely as the year draws to a close.

“Key investment themes include near-term defensive strategies, staying agile to build positions on broad market weakness, focusing tactically on laggards, and concentrating on stocks with a Johor angle—coupled with a bottom-fishing strategy on small to mid-caps,” RHBIB commented.

RHBIB maintained its 'overweight' ratings on the banking, property, M-REITs, construction, technology, healthcare, basic materials, oil and gas, utilities, and rubber products sectors.

Key risks to this outlook include negative geopolitical developments, heightened inflation risks that could prompt the US Federal Reserve to reassess its monetary policy, and an escalation of the US-China trade conflict.

-- BERNAMA