2025 Market Outlook Highlights From Rakuten Trade

Recently the experts at Rakuten Trade shared their investment insights going into 2025.

They have also applied their expertise to provide crucial insights, actionable sector picks, and insightful stock forecasts to help investors navigate the ever more complex and volatile financial landscape.

Kenny Yee and Thong Pak Leng, Rakuten Trade’s Head and VP of Research respectively presented their expert tips and roundup of global markets to help investors plan their portfolio going into 2025.

But first, let’s recap 2024 investment high and lows.

The big standouts of 2024

These include prominent FDIs (namely in the tech sector), a stronger Malaysian Ringgit, volatility of fund flows, and the surprise return of “Tariff Trump”.

Additionally, Rakuten has noticed that the current trend of foreign funds has been very “short term”. This may have been the reason for ongoing market volatility in the region.

Rakuten also predicts that growth in corporate Malaysia earnings is expected to be around a decent 17.0%. As for 2025, earnings may experience a degree of sustainable growth at almost 10.0%. For 2026, Rakuten expects a 7.1% growth underpinned by improvements across the board.

What to watch out in 2025 global markets

United States

The US Federal Reserve remains on shaky ground heading into 2025. To cut or not to cut will likely be the question on traders’ minds. However, Rakuten notes that Wall Street might be a little disappointed if interest rates retain the status quo, or worse, end up higher this year.

It appears that the US may face a major fiscal challenge for the coming year due to the debt ceiling. US national debt National Debt was US$31.4trillion as at June 2023 (when it was suspended) and US$36.1trillion at 31 December 2024. Currently the amount stands at US$36.3trillion and counting.

Prevailing high equity markets’ valuations is another issue to look out for and will likely be the biggest road-bumps ahead as failure to meet such high expectations will be construed as a failure and may instigate a sell-down. Already, we have witnessed Wall Street’s wobbly knees over the past trading sessions. This can be seen as a classic case of valuation outrunning the fundamentals.

Hong Kong

Last year, it was noted that Hong Kong had a rough road ahead for them. At the moment, HK is not doing badly, though there are some caveats. 2024 saw the HSI making waves with an impressive 20% jump. Nonetheless, market undertone remains cautious as traders predominantly the foreigners are still unconvinced of the plethora of stimulus measures from Beijing and demand for more transparency.

Rakuten also noted that some tweaking will still be required, as persistent weak economic data from China further eroded market interests. Latest industrial production, retail sales and fixed asset investment data were all noted to have fallen below expectations.

At the same time, China is aiming to revive domestic consumption and the property sector as household consumption contributed just 29% of headline GDP from more than 50% before the pandemic.

Malaysia and other regional markets 2025 outlook

Usually, overall fund flows can be described as predominantly dictated by net foreign flows. However, of late it is evident that the local institutions (2024 net inflows RM10.3bn) are taking over the reign.

Rakuten believes domestic fund flows to intensify over time and may even take the lead to support/prop-up the local bourse. Looking ahead, Rakuten anticipates another year of erratic foreign flows depending on the degree of prevailing geopolitical tension.

As for the regional markets in Indonesia, Philippines, Thailand, Singapore, Vietnam and Shanghai, Rakuten Trade has noted their decent economic growth underpinned by their value proposition.

Malaysia may still be ‘premier league’ material

Regardless, Malaysia is looking to retain its status of Premier League material for investors. This is mainly due to a number of factors, one of which includes relative political stability, compared to the 2018-2022 period.

2024 has also been the year where we experienced a spate of FDIs announcements for DCs, chips and green tech from the US, Europe and China. Thus far, approx. US$17bn/RM80bn investments were well documented.

There also appears to be many domestic opportunities as well, especially within the construction sector whereby more projects from the private sector are being rolled-out, with the mega ones from the government coming soon namely those from Penang MRT.

2025 performance by sectors and stock picks

Sector overview

Following is the sector overview highlighting the industry sectors that are likely to perform better than their industry index and which may have moderate performance.

• Auto (Neutral)
• Banking (Overweight)
• Construction (Overweight)
• Consumer (Neutral)
• Healthcare and Glove (Overweight)
• Oil & Gas (Overweight)
• Plantation (Overweight)
• Property (Neutral)
• Power and Utilities (Overweight)
• REIT (Neutral)
• Technology (Overweight)
• Telco (Overweight)

Chinese New Year stock picks

During the brief, Rakuten Trade also recommended the following MY stock picks:

CIMB Group Holdings Berhad (Price RM7.97, TP RM8.91)
BUY with a TP of RM8.91 based on 1.25x FY25 P/BV.

Gamuda Berhad (Price RM4.72, TP RM5.85)
BUY with a TP of RM5.85 based on its MEDIAN PER of 23x over FY7/26 EPS.

Mah Sing Group Berhad (Price RM1.61, TP RM2.43)
BUY with a target price of RM2.43, based on a SOP valuations.

RHB Bank Berhad (Price RM6.27, TP RM7.14)
BUY with a TP of RM7.14 based on 0.9x FY25 P/BV.

Sunway Construction Group Berhad (Price RM4.35, TP RM5.34)
BUY with a TP of RM5.34, by applying its MEDIAN 26x PER over FY25 EPS.

For more information on the 2025 market outlook and investment highlights, go to www.rakutentrade.my.