KUALA LUMPUR (March 4) — Escalating tensions in the Middle East may create fresh cost pressures for Malaysian contractors and building materials producers, according to a recent strategy note by CIMB Securities.
The research house cautioned that prolonged geopolitical instability could disrupt supply chains and trigger renewed volatility in key input costs such as coal, scrap metal and fuel. Construction firms, in particular, may face tighter margins if procurement timelines and material pricing become unpredictable.
CIMB Securities said it is adopting a more defensive stance in light of recent developments involving the US-Israel conflict and uncertainties surrounding US tariff policies. As a result, it lowered its end-2026 target for the FTSE Bursa Malaysia KLCI (FBM KLCI) to 1,754 points from 1,772 previously.
The military escalation over the weekend has added to investor caution, overshadowing improvements recorded during the latest corporate earnings season. While more than a quarter of companies under coverage exceeded expectations — an improvement from the previous reporting cycle — geopolitical concerns are weighing on sentiment.
CIMB Securities downgraded the plantation and building materials sectors to “neutral” from “overweight”, citing limited upside after recent share price gains and softer palm oil price projections.
The firm’s revised top picks now lean toward defensive counters, including:
KPJ Healthcare Bhd
Mr DIY Group (M) Bhd
ViTrox Corporation Bhd
Public Bank Bhd
Other large-cap names on its preferred list include Gamuda Bhd, UEM Sunrise Bhd, Axis Real Estate Investment Trust and Pavilion Real Estate Investment Trust, among others.
For the small- and mid-cap segment, additional picks span healthcare, utilities, mobility and real estate investment trusts.
Rising construction input costs have direct implications for developers and investors active in industrial land in Selangor and commercial property in KL. Margin compression among contractors may translate into higher tender prices, potentially impacting feasibility calculations for new office space in Bukit Jalil or mixed-use developments across Klang Valley growth corridors.
For industrial property owners, especially those planning a factory in Puchong or expansion within the industrial property in Subang area, cost volatility in steel, energy and logistics could influence build-to-suit timelines and capital expenditure planning.
At the same time, a more defensive equity strategy by research houses suggests investors may prioritise income-generating assets such as industrial and commercial REITs. This could support demand for stabilised assets in prime Selangor industrial zones and established commercial hubs in Kuala Lumpur.
As global uncertainties persist, stakeholders in KL and Selangor’s property markets may need to focus on cost management, strategic land acquisition and resilient asset classes to safeguard long-term returns.
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