The Bursa Malaysia Financial Services Index tracks the performance of financial stocks listed on Bursa Malaysia. The index encompasses a broad range of companies operating in banking, insurance, investment management, and other financial services, thereby capturing the pulse of Malaysia’s financial industry.
The firms play an essential role in facilitating economic activities by providing credit, managing risk, and offering vital liquidity to the market. As one of the key sectors of the Malaysian economy, the industry is sensitive to changes in monetary policy, economic cycles, and regulatory developments.
Bursa Malaysia Financial Services Index Performance
Since a significant dip at the beginning of the COVID-19 pandemic, the index has performed extremely well, climbing to new highs back in September 2024. As of February 2025, the index has gained over 11% in the past 12 months. The overall trajectory reflects the resilience of the sector.
| Period | Performance (2025) |
|---|---|
| 1-Year Performance | +11.23% |
Bursa Malaysia Financial Services Index Top 5 Companies
The index is reviewed quarterly in March, June, September, and December.
| Company | Market Cap |
|---|---|
| Malayan Banking | MYR 126.70 Billion |
| Public Bank | MYR 87.35 Billion |
| CIMB Group Holdings | MYR 89.72 Billion |
| Hong Leong Bank | MYR 44.44 Billion |
| RHB Bank | MYR 29.08 Billion |
Malaysia Financial Services Stocks Forecast
The Bull Argument: While not focused on the financial sector specifically, an article in October 2024 noted that Malaysia’s stock market is experiencing a steady revival. Al Jazeera noted that “billions of dollars” is pouring into the exchange which was “once written off as one of the region’s worst performers.” They believe the resurgence is due to Malaysia’s “robust post-pandemic economic growth and a surge in foreign investment by US tech giants.”
Focusing on the financial services sector specifically, strong credit demand and supportive government policies are expected to drive future growth. S&P Global said in April 2025 that they expect retail credit growth to remain strong, and funding and liquidity conditions to stabilise. “Strong labor market conditions and proactive write off policy should continue to help banks maintain low nonperforming loans ratios,” said the firm.
Furthermore, the ongoing digital transformation and improved risk management should bolster profitability. Enhanced operational efficiencies and rising transaction volumes are also expected to contribute to growth.
The Bear Argument: Despite the positives, we always have to consider the bear argument. Some caution that potential economic headwinds could negatively affect the sector. For example, such as a downturn in economic activity resulting from geopolitical headwinds such as tariff risks, could impact the Malaysian economy. Regulatory pressures and increasing competition, especially in the digital space, may also pose risks. Additionally, concerns over loan quality and non-performing assets could weigh on the performance of financial institutions.
Our View: The recent performance of the Bursa Malaysia Financial Services Index shows that the sector has remained resilient , with its diverse mix of banks, insurers, and asset managers providing a balanced opportunity for income generation and capital growth. Although the sector is cyclically sensitive and subject to regulatory shifts, its solid fundamentals and essential role in the economy make it an appealing option for long-term investors.
Who Should Invest in Malaysian Financial Services Stocks
Malaysia-focused ETFs are limited. However, the iShares MSCI Malaysia ETF is significantly (44.54%) weighted towards financial stocks. Other ETFs, such as the Global X FTSE Southeast Asia ETF, also has a significant financials weighting, with some Malaysian banks included in the index.
Overall, the sector is particularly suited to:
Income-Focused Investors: Those seeking regular dividends from stable financial institutions, may see an opportunity in Malaysian financial services names.
Long-Term Investors: Investors with a long investment horizon can also potentially benefit from the sector’s capacity for steady capital appreciation.
Cyclical Investors: Individuals who understand and can navigate economic cycles may find opportunities during periods of economic recovery.
