24/03/2026

BIZ & FINANCE TUESDAY | MAR 24, 2026

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Inflation to rise over next two years, says Maybank IB

Ringgit expected to be under pressure in near term on oil, US dollar strength KUALA LUMPUR: The ringgit is likely to remain under pressure in the near term as global markets turn cautious, with rising geopolitical tensions in the Middle East pushing up oil prices and strengthening the US dollar. UOB Global Economics & Markets Research said sentiment has been weighed down by the escalating US/Israel–Iran conflict, which shows little sign of easing. “The situation has disrupted key energy routes, including the Straits of Hormuz, sending crude prices towards multi-year highs and fuelling concerns over inflation,“ the research firm said in a note. The stronger oil prices have, in turn, shifted expectations for global interest rates. Investors are now bracing for a longer pause in rate cuts by the US Federal Reserve, with some even positioning for a possible rate hike later this year. This has supported the US dollar, which firmed against most major currencies. “The market is increasingly pricing in higher inflation risks due to energy prices, and this is changing the outlook for central bank policy,” UOB Global Economics & Markets Research noted. The US Dollar Index rose at the end of last week, while Asian currencies broadly weakened for a third straight week. Regional currencies such as the Korean won and Chinese yuan came under pressure, reflecting the wider risk off mood in financial markets. Although Malaysia’s financial markets were closed for a public holiday, the broader regional trend suggests the ringgit could face similar headwinds when trading resumes. The combination of a firmer dollar and higher oil prices typically weighs on emerging-market currencies, particularly when global investors become more defensive. Elsewhere, volatility in global equities has picked up. US stock markets ended lower in a choppy session, while the CBOE Volatility Index climbed further, signalling heightened uncertainty among investors. Looking ahead, UOB Global Economics & Markets Research said markets will be closely watching developments in the Middle East and key economic data from major economies. Preliminary manufacturing and services data from the US, Europe and Japan this week could provide further clues on the strength of global demand.

KUALA Malaysia’s inflation is expected to trend higher over the next two years, even though price pressures eased in February, as rising geopolitical tensions in the Middle East threaten to push up global energy, commodity and transport costs. Maybank Investment Bank Bhd (Maybank IB) said it expects inflation to average 1.8% in 2026 and 2.1% in 2027, up from 1.4% in 2025. The research house said the outlook is being shaped largely by external risks, especially the fallout from conflict in the Middle East, which has started to affect crude oil prices as well as aviation and freight costs. Those pressures, it said, could feed into Malaysia’s broader inflation trend in the months ahead. Still, it said there are some buffers in place. A firmer ringgit is helping to soften imported cost pressures, while the continuation of fuel subsidies is expected to cushion LUMPUR:

On the 5G front, PublicInvest noted that uncertainty remains over its existing access agreement with Digital Nasional Bhd, which could still run for several more years. “However, there is potential upside if a new arrangement with U Mobile leads to lower access costs in the future,“ it said. Despite recent weakness in its share price, PublicInvest said TM continues to stand out as a preferred pick among telecom players, given its clear growth drivers and improving dividend outlook. “With demand for connectivity showing no signs of slowing, the group appears well-positioned to translate its infrastructure investments into sustained returns,“ it said. 4.5% year-on-year in February, although this was less steep than the 7.2% decline recorded in January. Maybank IB said this reflected the monthly Automatic Fuel Adjustment mechanism, the revised Tenaga Nasional Bhd tariff structure and lower fuel costs. Transport prices also remained in negative territory, declining 0.7% year-on-year, unchanged from January, largely due to lower unsubsidised petrol and diesel prices amid more moderate global crude oil prices. The investment bank said the recent jump in global crude oil prices following the escalation of tensions in the Middle East could reverse some of the easing seen in transport and utility costs. It pointed to weekly fuel price settings in March compared with end-February, which showed sharp increases in unsubsidised fuel prices. RON95 rose by 68 sen a litre, or 23.3%, to RM3.27. RON97 climbed RM1.40 a litre, or 44.4%, to RM4.55, while diesel jumped RM1.68 a litre, or 55.3%, to RM4.72. Some price categories were unchanged. Inflation for furnishings, household equipment and routine household maintenance held steady at 0.2%, while clothing and footwear were flat at zero. At the same time, other categories continued to record stronger increases. Personal care, social protection and miscellaneous goods and services rose 6.9% in February, up from 6.6% in January. Alcoholic beverages and tobacco also edged up to 2.6% from 2.5%. Maybank IB said the increase in alcohol and tobacco prices reflects the pass-through from excise duty hikes announced in Budget 2026 and implemented from Nov 1, 2025. “Overall, the February numbers suggest inflation in Malaysia is still relatively contained for now. “But the latest external shocks, especially oil-related ones, are beginning to cast a longer shadow over the outlook,” Maybank IB said.

o Outlook shaped largely by external risks, especially fallout from Middle East conflict: Investment bank

to more moderate increases in several key categories, including food and beverages, housing and utilities, information and communication, healthcare, and education,” Maybank IB noted. Food and beverage inflation slowed to 1.3% in February from 1.5% in January. Housing, water, electricity, gas and other fuels rose 1.1%, slightly lower than 1.2% previously. Inflation in information and communication eased to 0.5%, healthcare slowed to 1.2%, while education moderated to 2.8% from 3.2%. Maybank IB also noted continued declines in electricity, gas and other fuel costs, which fell

part of the impact on consumers. Maybank IB estimated that if global crude oil prices were to stay 10% higher for a sustained period, Malaysia’s inflation rate could rise by about 0.2 percentage points. In February, Maybank IB noted that both headline and core inflation came in lower compared with January. Headline inflation eased to 1.4% year-on-year from 1.6% in January, while core inflation slowed to 2% from 2.3%. On a month-on-month basis, however, headline inflation edged up 0.2% in February from 0.1% in January, while core inflation rose 0.1% against 0.4% previously. “The slower annual inflation reading in February was mainly due

A firmer ringgit and fuel subsidies are helping to cushion costs, but global shocks may still lift inflation ahead. – PEXELS PIX

PublicInvest confident TM will deliver higher dividends KUALA LUMPUR: Telekom Malaysia Bhd (TM) is shaping up for stronger shareholder returns over the next few years, underpinned by steady growth across its core businesses and rising demand for data and connectivity. Following a recent engagement with the company, Public Investment Bank Bhd (PublicInvest) is increasingly confident that TM could start paying higher dividends from 2026 onwards, supported by firmer earnings visibility and a stronger capital position. the following years, lifting dividend yields to above 4%, making the stock more attractive to income-focused investors,“ the bank-backed research firm said. Behind this optimism is a broadly stable growth trajectory across all of TM’s segments. Its consumer arm Unifi is expected to continue posting modest gains, supported by a steady subscriber base and ongoing bundling of content and devices. Global, particularly with the rollout of its data centre business. The research firm also noted that the TM Nxera facility in Iskandar Puteri is already drawing strong interest, with potential large-scale customers exploring capacity take-ups of 100MW or more. While these deals have yet to be finalised, the initial 64MW capacity is set to come online this year, with fuller earnings contribution expected from 2027 onwards. noted that TM is tightening its cost structure, setting aside around RM300 million for a voluntary separation scheme to streamline its workforce. “Some roles are being consolidated or replaced through automation and artificial intelligence, with cost savings expected to materialise from 2028 onwards,“ it said.

Capital spending is also set to rise, with TM guiding for a capex-to revenue ratio of up to 20% in 2026, compared with just over 16% previously. Much of this will go into expanding fibre networks and submarine cables, and completing its data centre developments — areas seen as critical to capturing future digital demand.

The enterprise segment TM One is also seen gradually expanding despite stiff competition, as the group pushes more tailored solutions to both public- and private-sector clients. PublicInvest noted that the real upside is expected to come from TM

To support this expansion, TM has secured a long-term power supply under a 280MW agreement with Tenaga Nasional, ensuring sufficient capacity to meet its data centre ambitions. At the same time, PublicInvest

PublicInvest noted that the group has already maintained a dividend per share of 31 sen for both 2024 and 2025, but there is now room for improvement. “Projections indicate payouts could edge higher to about 32 sen in