Source: Utusan Malaysia | Category: Economy & Business | UPM Expert: Prof. Dr. Law Siong Hook, School of Business and Economics, Universiti Putra Malaysia (UPM)

The local stock market is expected to sustain its positive momentum, with the FBM KLCI Bursa Malaysia projected to trade within the range of 1,695 to 1,725 points, supported by continued foreign fund inflows, sustained high oil prices, and a stable domestic economic foundation.

Commenting on this trend, Professor of Economics at UPM's School of Business and Economics, Prof. Dr. Law Siong Hook, explained that the rise in crude oil prices has contributed to the strong performance of oil and gas (O&G)-linked counters, particularly companies tied to Petronas, which carries significant weightage in the FBM KLCI.

He also pointed to expectations that the US Federal Reserve (Fed) may soon ease its monetary policy stance. According to Prof. Dr. Law, such a move could boost global investor risk appetite and encourage further foreign capital inflows into emerging markets, including Malaysia.

Domestic Economic Fundamentals Remain Solid

Prof. Dr. Law noted that while movements in the FBM KLCI are heavily influenced by global factors such as commodity prices, international monetary policy, and global investor sentiment, Malaysia's economy continues to demonstrate strong resilience from a domestic standpoint.

He explained that household spending remains robust, supported by a stable labour market and controlled inflation. Investment activity has also picked up pace, particularly in infrastructure, manufacturing, data centres, renewable energy (RE), and the semiconductor industry — developments he said have strengthened investor confidence in Malaysia's medium- to long-term growth prospects.

On the simultaneous rise in oil prices and stock market performance, Prof. Dr. Law observed that this generally reflects growing investor confidence, though he cautioned that it does not necessarily indicate a broad-based improvement in overall economic prospects.

"If the rise in the stock market is supported by corporate earnings growth, improved productivity, sustainable investment, and strong domestic demand, then the increase reflects a genuine strengthening of economic fundamentals," said Prof. Dr. Law.

Conversely, he added, if market gains are driven mainly by high commodity prices or short-term capital inflows anticipating global interest rate cuts, the market would remain vulnerable to a correction should these underlying factors shift.

Geopolitical Risks Warrant Close Monitoring

Prof. Dr. Law further cautioned that escalating geopolitical tensions remain a key risk that could disrupt global trade and slow global economic growth, particularly in the United States or China — two major economies whose weakening demand could reduce Malaysia's exports and affect the earnings of local companies.

This article is based on original reporting by Utusan Malaysia. Prof. Dr. Law Siong Hook is a Professor of Economics at the School of Business and Economics, Universiti Putra Malaysia (UPM), and regularly contributes expert commentary on macroeconomic issues and national financial market trends.

Date of Input: 24/07/2026 | Updated: 26/07/2026 | norasiah