Previously, the research firm said it expects the index to touch 1,660 by year-end.
Rakuten head of research Kenny Yee said the upward revision of its projection is underpinned by improved market sentiments and increasing daily trading volume.
“I think this will attract more investors to come into the play.
“Therefore, hitting the 1,700 level is not impossible,” he told reporters after a virtual media briefing on ‘Malaysia’s Third Quarter Market Outlook: Is Market Liquidity Building Up?’.
Commenting on the current market trend, Yee said while the market is showing signs of improvement, a full-fledged bull run has yet to materialise.
He noted that the rising trading volume on the local market is a positive indicator but emphasised the need for more diversified investor interest beyond traditional blue-chip stocks.
“The current momentum suggests we are warming up rather than sprinting ahead,” he said, highlighting the importance of sustained positive news flow and broader investment across sectors.
He particularly underscored the significance of the banking sector, describing it as the “engine of the country’s growth” while noting that banking stocks are still reasonably priced.
Earlier, during the briefing, Yee highlighted notable trends in the market performance across Southeast Asia.
“Malaysia and Vietnam are taking the lead in the performance to date, compared to our regional peers,” he added.
According to Rakuten’s data, Malaysia’s FBM KLCI year-to-date (YTD) performance has improved by 11.7%, in tandem with the Philippines Stock Exchange Index (+2.3%), Singapore’s Straits Times Index (+7.3%) and Vietnam Ho Chi Minh Stock Index (+14%).
“As for fund flows, Yee noted that last year, the overall fund flows were predominantly dictated by foreign ones.
“But of late, due to the clawing back of funds from the overseas investment, it is rather apparent that the local institutions are taking over the reins, giving a more stable platform for the FBM KLCI.
He believed that domestic fund flows would intensify over time and take the lead to prop up the market.
“This is more evident as foreign markets, especially Wall Street, are currently deemed overvalued and may not justify the risk-reward ratio,” he added.