Malaysia’s Budget 2027, set to be presented in Parliament on October 9, is widely anticipated to support the domestic economy through a combination of increased government spending on household aid and infrastructure development. Analysts expect the budget to adopt a populist and expansionary stance, given its timing ahead of the next general election.

Tradeview Capital fund manager Neoh Jia Man anticipates that the government under Prime Minister Datuk Seri Anwar Ibrahim will prioritize fiscal expansion rather than tightening or reform, arguing that any fiscal reform benefits may accrue to a future government if Anwar’s administration does not continue in power. As a result, the focus will likely be on increasing direct cash handouts, such as through the Sumbangan Asas Rahmah (Sara) or MyKasih programs, aimed at boosting consumption among lower- and middle-income households. This approach is expected to favor sectors closely tied to consumer staples.

In addition to consumer support, Neoh expects significant announcements related to delayed major infrastructure projects, particularly the Mass Rapid Transit Line 3 (MRT3), which has seen land acquisition processes underway for over a year and route planning finalized. He noted that infrastructure developments would exert a broad economic impact, benefiting contractors, suppliers of construction materials, and transportation sectors, due to the multiplier effect of such projects. The construction materials sector could particularly rebound, as it has been affected by increased diesel prices linked to the ongoing US-Iran conflict, which in turn has dampened construction activity.

Kenneth Leong, head of research at Berjaya Research, also highlighted the consumer sector as a principal beneficiary of Budget 2027, supported by ongoing targeted subsidies and price control measures. He pointed to assistance programs including Sumbangan Tunai Rahmah, Sara, and Budi Madani, which provide direct financial support, as well as initiatives aimed at safeguarding essential goods prices through enforcement and supply management. Leong added that policies promoting progressive wages, high-skilled employment, and community income initiatives, such as Sejati Madani, could further strengthen household incomes and consumption.

Beyond these immediate sectors, Leong indicated that the government would maintain focus on technology and renewable energy under the Madani administration’s growth agenda. Key investment priorities include semiconductors, artificial intelligence, digital services, energy transition, pharmaceuticals, logistics, and aerospace. This direction aligns with several national strategies, such as the New Industrial Master Plan 2030, National Energy Transition Roadmap, and National Semiconductor Strategy, among others.

However, Leong cautioned that initiatives like minimum wage increases and stricter foreign worker policies could negatively affect labor-intensive sectors including manufacturing, plantation, and construction, potentially compressing profit margins unless mitigated by higher prices or productivity gains. Meanwhile, industries linked to tobacco and alcoholic beverages may face further regulatory pressures, as the government promotes healthier lifestyles and could impose higher excise duties that may reduce demand.

The healthcare sector might also see increased indirect benefits from government spending. Although historically much public healthcare funding has lacked direct impact on listed companies, enhanced allocations could generate opportunities for private healthcare providers and suppliers through increased demand and public-private partnerships.

Neoh noted that technology, oil and gas, and utilities sectors are unlikely to gain significantly from the budget, as government spending tends to focus more on sectors with direct household impact, such as construction and consumer goods. He identified a potential downside risk from higher minimum wages, which could particularly affect labor-intensive consumer discretionary and industrial companies by squeezing margins. Nonetheless, consumer staples might experience a more muted impact, as wage increases to lower-income earners could translate into higher spending on essential goods.

Market analysts such as RHB Research view Budget 2027 as mildly positive overall. The firm recommends investors accumulate quality stocks on market dips, anticipating that social protection measures targeting the B40 and M40 income groups will favor consumer, property, transport, and healthcare sectors. Government development spending, projected at RM83 billion, is expected to underpin growth initiatives.

RHB Research highlighted preferred picks across various sectors, including Nestle (M) Bhd, 99 Speed Mart Retail Holdings Bhd, and Farm Fresh Bhd in consumer; Malaysian Pacific Industries Bhd and Pentamaster Corp Bhd in technology; Gamuda Bhd and Kerjaya Prospek Group Bhd in construction; and IHH Healthcare Bhd in healthcare. The firm remains overweight on energy, favoring YTL Power International Bhd, Tenaga Nasional Bhd, Samaiden Group Bhd, and Solarvest Holdings Bhd, anticipating benefits from new generation capacity and solar energy tenders.