Corporate gains lift sentiment

PETALING JAYA: Corporate results for the third quarter ended September (3Q25) have ignited optimism for sustained positive momentum heading into the new year, but analysts remain cautious about the outlook of the companies listed on Bursa Malaysia.

CIMB Securities, in a recent note, pointed out that as of Nov 26, 65 companies under its coverage had released results; 15, or 23%, beat expectations, 23% missed, and the remaining 54% met expectations.

“This translates into a beat-to-miss ratio of 1.00, an improvement from 2Q25’s 0.55 and 1Q25’s 0.24,” it said.

The research house said among FBM KLCI constituents under its coverage, 19 out of 30 have reported results, with six companies beating expectations and three falling short, yielding a beat-to-miss ratio of 2.0.

CIMB Securities said this is significantly stronger than the 1.0 ratio for its broader coverage universe, indicating that large-cap names are delivering more resilient and better-than-expected results.

Moomoo chief market strategist for South-East Asia Isaac Lim noted that the premier index has seen more gainers than losers, with 99 Speed Mart Retail Holdings Bhd achieving the best growth in the last three months, adding a strong 22.6% in share price.

He said Maxis Bhd and Nestle (M) Bhd came in second and third, respectively, both gaining about 14% over the same period.

However, he told StarBiz: “With consumer-staple stocks taking two out of the top three places so far in the current quarter, it is no surprise that investors are slightly more cautious.”

Lim’s conclusion carries the logic that when consumer-staple stocks dominate the list of top performers, it usually signals that investors are becoming defensive and cautious – not that there is broad-based confidence or strong risk appetite.

Taking into account the increase in volatility across global markets, along with growing fears of a bubble in the artificial intelligence (AI) space due to lofty valuations, fear has crept into emerging markets such as Malaysia, prompting institutions and investors alike rotate into more cyclical defensive sectors, he explained.

He said: “The other theme that investors should watch is that Malaysian plantation stocks continue to outperform the FBM KLCI.

“However, there is an increase in calls by other analysts suggesting this outperformance is more sentiment-driven rather than earnings-backed.”

From a macro perspective, however, Lim pointed out that as long as the US Federal Reserve continues its rate-cutting cycle well into 2026, investors can expect Malaysia’s equity market to maintain its upwards trajectory in line with the other global stock indices.

He opined that should global sentiment improve, particularly with regards to AI and valuations for tech stocks, Malaysia’s equity market could continue to attract greater inflows, potentially boosted by the ongoing development of the Johor-Singapore Special Economic Zone.

In a recent note released by Maybank Investment Bank, analysts believe the FBM KLCI could still reach the 1,700 level as long as there is positive price movement within the banking sector and certain counters.

“Should price surpass and breakthrough the 1,700 level, the next target levels of 1,760 and even 1,825 could be possible over the next 12 months,” Lim predicted.

Herald van der Linde, head of Asia equity strategy at HSBC, believes that while the tariff saga has been the dominant theme this year, growth in some trade-dependent economies has been, ironically, more than resilient.

“In fact, for some, the 2025 growth forecasts we have now are even higher than those made before ‘Liberation Day’. This is the case for Vietnam and Singapore, and Malaysia is the next to follow suit,” he told StarBiz.

Van der Linde observed that net exports had reversed to a positive contribution to the 3Q25 economy, helping to lift growth.

He said two notable trends are clear: “First, Malaysia’s exports to the United States have moderated, reflecting the fading impact of frontloading trade.

“Second, Malaysia has benefitted handsomely from the still-elevated AI-driven demand, similar to other tech-exposed markets.”

That said, he cautioned that the growth story could play out differently for equities, as what happens in the economy is not always reflected in the stock market.

“Earnings in Malaysia have been underwhelming this year. Analysts have revised their full-year earnings growth forecasts, now projecting an earnings per share (EPS) increase of only 5%, down from the initial 10% forecast at the start of the year.

“The issue lies with banks, which saw low growth as interest rates declined. They are a major component of the market, making up around one-third of total market weight,” Van der Linde observed.

Tradeview Capital chief investment officer Nixon Wong is of the view that 3Q25 is shaping up more like the end of the downgrade phase and the start of a slow upgrade or normalisation phase – with most sectors improving except automotive, non-bank financials and energy – rather than the beginning of a powerful new earnings cycle.

Key shifts include earnings disappointments that are less frequent and more idiosyncratic rather than broad-based, he said, adding: “Large-cap banks, construction, selected consumer, plantation and tech names are reasserting leadership, while the index itself is still held back by weak fund flows.

Wong maintained an “overweight” call on banking, construction, renewables, consumer and retailing, as management teams across the banking, domestic consumer, construction and logistics sectors are generally more upbeat than in the first half of 2025.

“At the same time, corporates are flagging external risks such as US tariff policies – especially on semiconductors, furniture and pharma – geopolitics and still weak petrochemical spreads.

“That keeps capital expenditure plans disciplined, but not frozen,” Wong said.