The investment bank said its FBM KLCI earnings projections have been marginally tweaked by 1% to 2% for 2024-2025.

The slightly higher base-case end-2024 FBM KLCI targets were pegged to a 2024 forecast (2024F) price-to-earnings ratio (P/E) of 14.5 times.

It mentioned that this is slightly below its five-year median of 14.8 times, which is likely to decline over the next quarter due to persistently low post-pandemic valuations.

“Our base-case target stems from rising downside risks, including an appreciating ringgit towards the end of the year which could unravel foreign equity inflows attracted by the weak currency and slowing global economic growth prospects.

“Additionally, our target setting is affected by shifting expectations of the timing of the US Federal Reserve cuts, which will drive volatility across all markets, and moderating domestic consumption amid rising domestic inflation from targeted subsidy rationalisation,” it said in a research note.

It noted that FBM KLCI’s 2024F core net profit growth slid to 13.4% from 14.7% last month from a slight uptick of 1% in the 2023 earnings base.

For the 2025 forecast (2025F), AmInvestment projects FBM KLCI’s earnings growth at 8.6%, up from 7.2% last month.

Meanwhile, the research firm has maintained its “overweight” call on the oil and gas, construction, technology, manufacturing, ports, power, property, real estate investment trust (REIT), glove and transportation sectors.

It has also named CIMB Bank, RHB Bank, Tenaga Nasional, Telekom Malaysia, Gamuda, Dialog Group, Sunway, Yinson, Pavilion REIT, and Mah Sing as its top picks.

“For dividend plays, we like REITS such as UOA REIT, Pavilion REIT, Hektar REIT, Sunway REIT, and IGB REIT as well as Maybank, MBM Resources, RHB Bank, and CIMB Bank,” it said.