KUALA LUMPUR: HSBC Global Research is bullish on Bursa Malaysia's key index even as it remains cautious about the economy and the ringgit.
Its head of equity strategy for Asia Pacific Herald van der Linde said the FTSE Bursa Malaysia KLCI is expected to reach 1,850 points by the end of 2025.
He said Malaysia has positioned itself as a crucial link in the global tech supply chain, with European and American companies recently deciding to move to or expand their manufacturing facilities here amid ongoing trade tensions.
Nevertheless, van der Linde said despite strong performance during the first three quarters of 2024, the momentum had slowed in recent months due to external uncertainties.
"Sectors ranging from equipment makers and chip designers to testers, construction companies and power producers are benefiting from an inflow of foreign investment.
"In addition, we believe Malaysia is well positioned to benefit from the increase in data centres amid increased demand for cloud and artificial intelligence (AI) services; large tech giants are already investing heavily in the market," he said at HSBC 2025 Asian Market Outlook's virtual press conference.
Herald said utilities and industrial sectors are best placed to benefit from the trend.
"Consensus forecasts earnings to grow 9.0 per cent in 2025. In terms of valuations, FTSE Malaysia trades at a 12- month forward price-to-earnings ratio (PE) multiple of one time, which is largely on par with the five-year median PE multiple.
"Investors have been building exposure since 2023, with fund positioning already at a five-year high. This limits how much further they can go," he added.
