Bursa Malaysia's Market Capitalisation Hit RM2 Trillion for First Time Ever, KLCI at Two-Year High

Malaysian stocks hit RM2 trillion in market capitalisation for the first time ever while the benchmark index FBM KLCI surged to a two-year high on its fourth straight day of rally on Tuesday.

The KLCI rose as much as 12.6 points or 0.79% to 1,609.99, its highest since May 5, 2022. The index was at 1,607.86, still up 10.47 points or 0.7%, with 25 out of 30 constituents posting gains at 2.55pm. MR DIY Group (M) Bhd was the top gainer in the index, rising 3.5% to RM1.76.

The gains appear sustainable and on track to hit 1,755 by the end of this year, CGS International said. The aggregated 12-month target for the KLCI stands at 1,683 points, Bloomberg data showed.

“We continue to advocate paying more attention to domestic-driven sectors, as we feel the domestic economy is picking up with improved growth in both private consumption and gross fixed capital formation,” its head of research and strategist Chehan Perera told The Edge.

For strategy, CGS likes banks, construction, utilities, real estate investment trusts, conglomerates, healthcare and telecoms, he added.

Investors also bet on small-cap stocks, pushing the index to its highest since October 2014, and Bursa Malaysia's Mid 70 Index also gained though ACE Market stocks edged lower.

Overall market breadth was positive, with 566 counters advancing and 426 retreating, while 473 were unchanged after 2.78 billion shares worth RM1.73 billion changed hands on Bursa Malaysia.

Most sectoral indices were also in positive territory, led by utilities as Ranhill Utilities Bhd surged 17.7% to RM1.40.

UOB Kay Hian's head of research Vincent Khoo believes that further upside will come from foreign inflows with anticipated rate cuts by the US Federal Reserve.

Further, geopolitical risks would likely dissipate after the US presidential election that will take place in November this year, he flagged.

The research house prefers commodities such as palm oil, oil and gas, and industrial metals, betting on a commodity price boom driven by global supply chain disruptions, weather disruptions and the restocking of strategic reserves in China and the US.

UOB Kay Hian also likes technology stocks in view of the anticipated recovery in the electronics manufacturing services and semiconductor-related sectors.