Janury 2026 Market Outlook

Global Backdrop: Robust U.S. Growth and Easing Financial Conditions

Global equity markets ended 2025 on a strong footing. S&P 500 rose 17% and Nasdaq Index jumped 21% for the year. US’s economy momentum improves in Q3 2025, with GDP expanded 4.3% year-on-year – the fastest pace in 12 months. Growth was driven by resilient consumer spending (+3.5%).

In December 2025, U.S. Treasury yields and Dollar both softened, with the 10-year Treasury yield declined from 4.19% to 4.11%. Federal Reserve cut the federal funds rate by 25 bps, bring the target range to 3.50% – 3.75%. This has lower global financing costs and improve liquidity across emerging markets. This easing cycle is expecting to support risk appetite throughout year 2026, underpinning asset valuations globally including Malaysia’s equity and property markets, where the KLCI rose 4.7% in December 2025.

Malaysia Macro and FX: Ringgit Outperformance

In 2025, ringgit Malaysia emerged as one of Asia’s best performing currencies, appreciating around 9% against the U.S. dollar. Looking ahead, Malaysia’s economy is expected to sustain a growth range of 4.5% – 5.5%, support by a widening current account surplus. This is driven by a recovery in electronics and semiconductor exports, and rising Information and Communication Technology investments.

The government had implemented more disciplined fiscal framework. These measures reduced the fiscal deficit from 4.0% to 3.3% of GDP, strengthening investor confidence and encouraging greater foreign participation in Malaysian government bonds. Collectively, these dynamics provide a stronger fundamental backdrop for the ringgit and the domestic asset markets.

Malaysia Residential Market: Renewed Momentum into 2026

2026 as a year of renewed momentum in the residential segment, nationwide home prices are likely to rise by approximately 2.5%–5.0%, supported by anticipated interest-rate cuts, targeted stamp duty exemptions, and healthy labour-market. This momentum will share across year 2026 especially for strong locations, trusted developers and efficient homes such as the Quayside JBCC development, which benefits from its proximity to the RTS Link, and Richmond Estelar in central Kuala Lumpur, are well-positioned to capture this upswing in demand and pricing power.

Commercial Real Estate: JS-SEZ and Capital Recycling as Key Catalysts

In the commercial and investment property space, Kuala Lumpur and Johor Bahru are increasingly driven by high-quality assets in well-connected, infrastructure-rich locations. Key policy and infrastructure catalysts include the Johor-Singapore Special Economic Zone (JS-SEZ), the RTS Link, and the emerging Kuala Lumpur-Johor “de facto” SEZ effects anchored by improved connectivity.

December 2025 saw a series of sizeable acquisitions by Axis-REIT, AME-REIT, AmanahRaya REIT and UOA REIT, with a particular asset focus on in Kuala Lumpur and Johor Bahru. At the same time, CBRE, an international real estate consultancy firm, notes that a large portion of unsold luxury units in Kuala Lumpur, such as in Mont Kiara, has been absorbed by foreign buyers under the Malaysia My Second Home Programme (MM2H).

These transactions and absorption trends highlight investors’ preference for well-located, well-managed assets. Against this backdrop, we expect quality assets in Kuala Lumpur and Johor Bahru to generate potential outperformance, which supportive for our portfolio exposure.

Summary

The January 2026 outlook points to easing global rates, resilient domestic growth, and supportive policy catalysts, creating a constructive backdrop for Malaysia’s equity and property markets.

• Global easing and Fed rate cuts are lowering funding costs and improving liquidity, encouraging risk-taking in emerging-market assets.
• Stable growth, moderating inflation, and a firmer ringgit bolster consumer confidence and support housing demand.
• Trade and investment catalysts – including the recovery in E&E exports and progress on RTS Link/JS-SEZ – strengthen prospects for industrial, logistics, and Johor-linked assets.
• Residential property continues a gradual recovery, with well-located, and integrated property seeing healthier pricing and take-up.

As Malaysia enters 2026 with steadily improving macro fundamentals and a renewed pick-up in investor participation, the high-quality, well-managed assets as well positioned for further valuation re-rating over the coming quarters.