Can Malaysia break the FBM KLCI's 'lost decade' curse?
KUALA LUMPUR: Malaysia's stock market is approaching a critical test as two major reforms take shape, but whether they can finally help it break out of what many describe as its "lost decade" remains an open question.
Malaysia's stock market, the FBM KLCI, is facing a critical test as two major reforms are set to be implemented, but it remains to be seen if they can help break the market's ongoing slump. Despite the country's economic growth over the past decade, the FBM KLCI has struggled to maintain gains and continues to trade below its historical valuation, currently standing at 1,630.87 points, down 13.95 percent from its 2018 peak.
The index has fallen short of its 10-year average valuation, trading at just 14.8 times 2026 earnings, compared to its 10-year average of 16 times. To break out of its "lost decade," the FBM KLCI would need to surpass the 1,900-point mark. Research suggests that this could be achieved by learning from regional markets, such as Singapore, Japan, and South Korea, which have experienced prolonged stagnation before making a recovery.
Singapore's Straits Times Index (STI) overcame its previous record high in 2025 after 17 years of stagnation, while Japan's Nikkei 225 and South Korea's Kospi have also seen substantial gains. Malaysia's planned reforms include the MY Value Up Programme, which aims to improve corporate fundamentals and capital allocation, and the expansion of the FBM KLCI from 30 to 50 constituents in 2027.
While these reforms could provide a catalyst for growth, the success of the market's recovery will ultimately depend on the execution of these initiatives and the participation of domestic investors.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
