Budget 2027 at a Glance
| Budget 2027 is set at RM459.8bn (OE: RM376.8bn; DE: RM83bn), with the fiscal deficit targeted at 3.3% of GDP. |
| GDP growth projected at 4.2–5.2% in 2027, vs revised 2026 growth of 4.8–5.3%. |
| Federal revenue projected at RM380.8bn (2026: RM363.6bn), with federal debt-to-GDP easing to 63.7%. |
| Key ministry allocations: Education (RM69bn), Health (RM47.7bn), Defence and Home Affairs (RM22bn each). |
| East Malaysia allocations: Sabah (RM18.7bn) and Sarawak (RM16.2bn), supporting regional infrastructure development. |
| STR/SARA assistance increased to RM16bn (2026: RM15bn), with eligible recipients receiving up to RM150 monthly under SARA. |
| RM510bn expenditure and investment framework, including RM25bn in GLIC investments, RM11bn in public-private investments and RM14.2bn from statutory bodies and MKD companies. |
| Technology and innovation: RM1.2bn for semiconductors via Khazanah/KWAP, RM6bn for R&D and RM30m through MDEC for AI adoption among 4,000 MSMEs. |
| Tourism and culture: RM935m allocated, alongside the extension of VMY2027. |
Budget 2016-2027 (RM’ bn)
Source: MOF
M+Global View
We favour Utilities, Construction, Renewable Energy and Consumer as the key beneficiaries of Budget 2027, supported by infrastructure spending, energy transition initiatives and stronger household assistance. Healthcare, Property and Technology remain selectively positive, while higher wages could pressure labour-intensive businesses with limited pricing power.
Preferred Budget 2027 Beneficiaries
| Theme | Stocks |
| Grid Infrastructure | EITA (BUY, RM0.83), MNHLDG, PWRWELL (BUY, RM1.41), SCGBHD |
| RE & Energy Efficiency | IAB, KJTS (BUY, RM1.32), NORTHERN, SAMAIDEN, SLVEST |
| Construction & Engineering | AWC (BUY, RM0.80), GAMUDA, HKB, SUNCON |
| Consumer | 99SMART, ECOSHOP, SPRITZER |
| Technology | LGMS (BUY, RM0.70), OPPSTAR, SKYECHIP, STRATUS |
| Healthcare | KPJ, PMCK, SUNMED |
| Affordable Housing | INTA (BUY, RM0.76), LAGENDA, LBS, SSB8 |
| Shipping | MISC, MTTSL |
FBM KLCI positioned for a potential year-end recovery. We see limited risk of significant post-Budget profit-taking, as the market has already undergone a correction over the past month amid surging US Treasury yields and uncertainty surrounding the FBM KLCI's expansion from 30 to 50 constituents. With the benchmark trading near oversold territory, we expect selective buying interest to emerge, supported by Budget 2027 initiatives, potential index-related fund flows and favourable year-end seasonality. Historically, the FBM KLCI has recorded positive December returns in over 85% of the past 25 years, averaging nearly 2%, providing scope for a year-end recovery, particularly if bond yields stabilise.
Our 4Q26 stock picks remain relevant. The preferred Budget 2027 beneficiaries are not exhaustive, as our recently published 4Q26 strategy already captures key opportunities in Construction and Technology, particularly infrastructure, data centres, power-related projects and semiconductor automation. We believe these themes remain well-positioned for near- to medium-term growth, with Budget 2027 providing additional catalysts alongside existing structural drivers.
4Q26 Sector and Stock-Pick Themes
Source: M+Global
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