23/02/2026

BIZ & FINANCE MONDAY | FEB 23, 2026 15 AI, semiconductor demand drives M’sian trade growth

PETALING JAYA: Malaysia’s external trade momentum remains supported by robust global demand for electrical and electronic (E&E) products, driven by artificial intelligence related hardware, 5G/6G infrastructure, Internet of Things and electric vehicle components. Kenanga Investment Bank Bhd (Kenanga IB) said the strong trade performance aligns with the global tech upcycle and rising global semiconductor sales. It said the Semiconductor Industry Association projects global semiconductor sales to reach a record US$1 trillion (RM3.9 trillion) in 2026, after growing 25.6% year-on year to US$791.7 billion in 2025. “This provides a significant tailwind for Malaysia. If current momentum holds, there is room to upgrade our export forecast,” Kenanga IB said in a report. Malaysia’s trade sector kicked off 2026 on a strong footing, with total trade rising 12.6% year-on-year to RM272.4 billion in January, the highest level ever recorded for the month since 1990. The increase from RM242 billion a year earlier was driven by robust growth in exports and imports, alongside a sharp expansion in the trade surplus, the Statistics Department said. Exports growth accelerated sharply to 19.6% in January from 10.2% in December, the fastest pace in 40 months and well above Kenanga IB’s 14.8% and consensus’s 14.3% expectations. Malaysia’s exports were supported by a firm rebound in demand from China and broader East Asia, with E&E products continuing to anchor growth. Shipments to China rose 16.1%, reversing December’s decline, while Singapore returned to marginal growth at 0.4%. Exports to the US remained strong at 33.9% despite moderating from the prior month, and the European Union sustained elevated growth at 26.0% even as momentum eased, while the contraction to Japan narrowed sharply. Exports to other East Asian markets accelerated markedly, led by Taiwan, Hong Kong and South Korea. Sectorally, manufacturing expanded 22.3%

o Kenanga Investment Bank says strong performance aligns with global tech upcycle

to a 40-month high, while mining returned to positive territory, offsetting continued weakness in agriculture. By product, E&E exports surged 39.5%, also reaching a 40-month high, and accounted for 48.0% of total exports despite easing slightly in value to RM70.5 billion from December’s peak. In contrast, commodity-related exports remained soft, particularly palm oil and palm based products, liquefied natural gas and crude petroleum. Imports slowed to 5.3% year-on-year, below consensus expectations but above internal forecasts, as a surge in re-exports was offset by a decline in retained imports. Growth in consumption goods moderated, while intermediate and capital goods contracted, contributing to a 4.0% month-on month pullback after four consecutive months of expansion. Kenanga IB said overall trade rose 12.6% year-on-year to a three-month high, although it slipped on a monthly basis, and the trade surplus narrowed slightly to RM21.4 billion, still ahead of expectations. Touching on risks, the investment bank said uncertainty remains around US tariffs and the

The Semiconductor Industry Association projects global semiconductor sales to reach a record US$1 trillion in 2026. – BERNAMAPIC

“Malaysia’s better-than-expected 2025 gross domestic product (GDP) growth of 5.2%, alongside solid fourth-quarter 2025, with performance standing at 6.3%, should support momentum into the first half of 2026. “A favourable base effect and resilient domestic demand will also underpin growth. However, external risks persist. “We maintain our 2026 GDP growth forecast at 4.5%, with a potential upgrade to 5% if current momentum continues,” Kenanga IB said.

impact of Trump-era policies on global supply chains, though risks appear less severe than initially feared. Commodity-related exports remain vulnerable to geopolitical tensions, supply disruptions and uneven global demand. China’s uneven recovery also poses downside risk. On the flipside, earlier global monetary easing, ongoing fiscal support, and the strengthening global tech cycle could cushion the downside, Kenanga IB noted.

SMEs urged to strengthen themselves, rectify weaknesses KUALA LUMOUR: Small and medium enterprises are urged to use the current economic stability, underpinned by a stronger ringgit, to strengthen their institutions and secure sustainable growth over the next five years, rather than pursue rapid expansion. The ringgit strengthened by more than 10% against the US dollar in 2025, making it one of Asia’s best-performing currencies. While acknowledging that a firmer ringgit appears positive as it tends to improve sentiment, Dass cautioned that “sentiment should not be confused with strength”. discipline, ensuring adequate liquidity and avoiding over-reliance on favourable market conditions. “SMEs need to enhance operational credibility by systemising documentation processes, strengthening supervision and ensuring consistent performance in line with high standards.

Gold futures likely to trade with positive bias KUALA LUMPUR: Gold futures on Bursa Malaysia Derivatives are expected to trade with a positive bias this week. RHB Investment Bank Bhd recommends that traders hold on to the long position initiated at US$5,098.50 (RM19,891) per troy ounce, while, to manage downside risks, the initial stop-loss threshold is set at US$4,800. “The first support is marked at US$4,800 per troy ounce, followed by the next one at US$4,550 per troy ounce. Meanwhile, the immediate resistance is at US$5,500 per troy ounce, followed by the higher resistance at US$5,700 per troy ounce,” it said in a research note on Friday. On a week-on-week basis, February 2026 rose to US$5,046.30 from US$4,977.30 and March 2026 increased to US$5,063.30 from US$4,994.30. April and May 2026 improved to US$5,081.10 from US$5,011.90 previously. The June and August 2026 contracts also settled higher at US$5,115.0 versus US$5,045.80 previously. Weekly trading volume weakened to 26 lots from 41 lots a week earlier, while open interest declined to 98 contracts from 484 contracts. The price of physical gold was fixed at US$5,004.80 per troy ounce at the London Bullion Market Association afternoon fix on Feb 19. – Bernama

In contrast, it said, the 10 year MGS yield declined 1.4 basis points m o m to 3.52%, supported by resilient domestic demand and stable policy expectations. “The resulting wider yield differential of 74.4 basis points (end-December 2025: 65 basis points) likely reduced the attractiveness of Malaysian bonds to foreign investors,” it said. RAM Ratings said market focus on the March 2026 Federal Open Market Committee meeting has intensified, as investors reassess future interest rate trajectory amid the still resilient US labour market. – Bernama “Increasingly, firms are selected based on reliability, compliance and bankability rather than relationships alone, as was often the case previously.” Dass said businesses should invest selectively in building capabilities, particularly in productivity, execution discipline and supervisory depth. He warned that businesses often face the greatest risks not from sudden shocks, but from a series of seemingly rational, incremental decisions, such as deferring system upgrades, relying on short-term financing or accepting weaker commercial terms, which cumulatively weaken resilience. “By the time conditions become difficult again, what was deferred has become a structural weakness.”

“This is not about growing quickly, but about becoming dependable and rectifying structural weaknesses,” FSG Advisory Sdn Bhd chief executive officer Dr Anthony Dass said. He said currency stability does not in itself strengthen businesses, but instead creates a more governable and predictable operating environment. “Over time, firms that earn trust gain access to opportunities that are not available to weaker institutions,”he said in response to questions from host Jessy Chahal during Bernama TV’s The Nation programme last Friday, entitled “Stronger Firms, Not Just a Stronger Ringgit.” Dass said the strengthening ringgit reflects growing foreign investor confidence, with increased investments and tourist spending flowing into Malaysia

“Currency stability does not strengthen a business but creates a more governable environment where leaders have the space to act deliberately rather than react defensively,”he said. Dass, who is also a national council member of the SME Association of Malaysia, said this was the type of period when businesses should focus on repairing their balance sheets and tightening operational discipline. SMEs should upgrade capabilities before expectations rise further, especially from banks, buyers, regulators and suppliers. “The responsibility shifts from endurance to strengthening the institution itself,” he said. Elaborating, Dass said firms should reinforce financial resilience by restoring balance sheet

Net foreign inflows into Malaysian bonds in January hit RM951.9m KUALA LUMPUR: Foreign investor participation in the Malaysian bond market reassessed the pace and timing of US monetary easing.

Malaysian Treasury Bills and Malaysian Islamic Treasury Bills and corporate bonds, amounting to RM480 million and RM709.3 million, respectively,” it said. RAM Ratings noted that net

continued to grow for the fourth straight month in January 2026, with net foreign inflows reaching RM951.9 million, said RAM Rating Services Bhd (RAM Ratings). In a statement, the rating

buying, however, moderated compared to previous months partly due to the wider US Treasuries-MGS yield differential last month and the cautious outlook on US Federal Reserve rate cuts. The rating agency said the US 10-year Treasury yield rose 8.0 basis points month-on month (m o m) to 4.26% as at end-January, reflecting firmer global yields as markets

agency said the net inflows were driven primarily by continued demand for Malaysian Government Securities (MGS) and Government Investment Issues, which saw inflows of RM2.1 billion. “This was partly offset by outflows from