KUALA LUMPUR: The FTSE Bursa Malaysia KLCI (FBM KLCI) is expected to hover between 1,650 and 1,750 points this year, supported by a steady domestic economic recovery, KSI Strategic Institute for Asia Pacific said.
This will be driven by stable commodity prices (particularly oil), steady growth in the technology and financial sectors, and positive government policies.
Strong corporate earnings growth, an appreciating ringgit, and rising foreign direct investment (FDI) and foreign portfolio fund inflows are also expected to support the index.
KSI said virtuous investment cycle remains the key theme in 2025.
Key drivers of market and stock performance are expected to include positive consumption spending driven by higher wages, and an acceleration in infrastructure development.
Structural reforms aimed at achieving fiscal sustainability, alongside state government economic initiatives, are also anticipated to play a significant role.
Furthermore, KSI said re-industrialisation and artificial intelligence (AI)-driven growth are projected to support the market, along with a rise in merger and acquisition activities, particularly in the banking and technology sectors.
Initial public offerings (IPOs) from the healthcare, telecommunications, and consumer sectors are expected to bolster market performance.
The firm said headwinds remain from both external and domestic.
"If global risks rise or if Malaysia faces domestic challenges, the index could struggle to break through the higher end of this range. It would lead into a market volatility.
"The global currency outlook for 2025 is influenced by a complex set of factors, including economic growth, geopolitical developments, monetary policies and broader financial market trends," it added.