Market steady despite election outcome

NEGRI SEMBILAN, 4 AUGUST 2026 —

The Malaysian stock market has shown resilience in the face of the recent Negri Sembilan state election, with the Bursa Malaysia index largely unaffected by the Barisan Nasional and Perikatan Nasional (BN-PN) alliance's commanding victory. The BN-PN pact secured a two-thirds majority, cementing its control of the state, but the outcome had been largely priced in by investors, according to CIMB Research.

Tradeview Capital chief investment officer Nixon Wong also believes that the election result, despite its political significance, is unlikely to determine Bursa Malaysia's medium-term direction on its own, with policy certainties and earnings delivery being more important drivers of the market.

BIMB Securities director of research Mohd Redza Abdul Rahman said that the recent election results should be broadly supportive for Malaysian equities, if they reinforce policy stability and reduce uncertainty. He noted that elections are unlikely to be the main market driver in the near term, with investors focusing more on corporate earnings, gross domestic product (GDP) growth, export momentum, and interest-rate expectations.

The macro backdrop remains favourable, supported by strong exports in the first half of 2026, a weaker ringgit that benefits exporters, and expectations of resilient economic growth in the second half of the year.

Looking ahead, Mohd Redza believes that investor focus will gradually shift towards the upcoming Melaka and Sarawak state elections, and eventually, the 16th general election or GE16. However, unless election outcomes materially alter the policy landscape, he expects fundamentals to remain the dominant driver of equity performance.

Strong export momentum, healthy investment inflows, the data centre and renewable energy build-out, and expectations of sustained GDP growth in the second half of the year are likely to outweigh near-term political concerns. As such, elections may influence sentiment at the margins, but earnings delivery and economic growth should remain the key determinants of market direction.

CIMB Research also noted that markets will closely monitor the DAP Special Congress on August 16 to see whether the party retains its Cabinet role in the Unity Government. More broadly, following BN's victories in Johor and Negri Sembilan, attention is likely to shift to the timing of GE16 and whether closer BN-PN cooperation at the state level would lead to broader national political alignment.

Meanwhile, Mohd Redza said that the second-quarter earnings season is likely to show a "modest positive bias" as more results are announced, led by technology, exporters, industrials, utilities, telecommunications, and selected financial and plantation names.

The technology and export-oriented manufacturing sectors are expected to remain key beneficiaries of strong export growth, a weaker ringgit, and resilient domestic economic activity. Demand linked to artificial intelligence, data centres, and digital infrastructure also continues to provide a supportive backdrop. Mohd Redza is also positive on industrials, logistics, and ports, which benefit from stronger trade flows and supply chain activity.

Financials should continue to deliver stable earnings, supported by healthy credit growth, asset quality, and stronger capital market activity.

On the domestic front, Mohd Redza said that utilities, telecommunications, and water-related companies stand out as structural growth beneficiaries. Rising investments in renewable energy, grid infrastructure, and data centres are driving demand for electricity, fibre connectivity, and water infrastructure. These sectors offer relatively defensive earnings profiles while benefiting from Malaysia's digitalisation and investment-led growth story.

However, sectors facing higher operating costs may see more mixed results, with consumer-related and selected manufacturing companies facing margin pressure from higher fuel, logistics, and imported input costs.

Nixon Wong of Tradeview Capital noted that it is still premature to conclude second-quarter corporate results, with initial evidence pointing to a reasonably supportive macro backdrop but uneven corporate performance. While Malaysia's positive economic performance should support corporate earnings, everything depends on respective financial executions on margins and costs. The earnings outlook is "generally constructive but increasingly selective", with improving technology and manufacturing activity, infrastructure, data centres, and foreign direct investment execution remaining positive drivers.

However, geopolitical uncertainties and political risk pose a downside to the domestic stock market, and investors will need to closely monitor these factors in the coming months.

Related: CIMB · Bursa Malaysia · Nixon Wong · Negri Sembilan