DEVELOPMENTS over the past 48 hours underscore just how delicate the situation remains. While the ceasefire announcement is a positive step, caution is still warranted given the risk of renewed tensions.
This concern stems from the last two rounds of US-Iran negotiations, both of which ultimately ended in strikes on Iran. Reflecting this uncertainty, market volatility has picked up.
Investor sentiment has been lifted by the possibility of Israel-Lebanon talks, which could pave the way for US-Iran negotiations to resume this Friday.
More crucially, the Strait of Hormuz could reopen if the ceasefire holds.
US markets continued their upward momentum on Thursday, even as oil prices edged higher, supported by optimism that the fragile two-week ceasefire between the US and Iran can be maintained.
“Still, we believe the coming fortnight will require heightened vigilance,” said MBSB.
Despite the potential of negotiations being called off, MBSB believes that we are firmly in a Scenario 2 situation given the announcement of the ceasefire.
While there may be situations that may cause concerns that the ceasefire may not hold, MBSB observed that there seems to be efforts by mediators to ensure that it does.
Recall Scenario 2 (the “Tension Case”) of their scenario analysis assumes that there no formal ceasefire for 6 weeks, but conflict is contained, and disruption to oil supply persisted.
While their Scenario 1 (the “Blue Sky Case”) fits the latest development somewhat (immediate ceasefire reached within 4 weeks. Hormuz chokepoint reopens), they believe that it is not the right conditions to call for a Scenario 1 moment yet.
This is based on recent history which leads MBSB to remain alert of possible re-escalation (albeit with less conflict intensity).
They saw that there was a “relief” reaction from the markets with laggard sectors (since start of the conflict) outperforming on Wednesday. However, this was reversed yesterday due to concerns of a halted negotiation.
“Having said that, since there are efforts to ensure negotiations proceed, we believe that our investment thesis still holds during these two weeks. Recall, we recommend investors to exploring the laggard sectors given the improved sentiment following the ceasefire,” said MBSB.
This is as long as there is no indication of a complete breakdown in negotiations between Iran and the US, that could lead to renewed escalation.
Some of MBSB’s top picks amongst the laggard sectors are as follows:
Gamuda (BUY, TP: RM5.60),
Sunway Construction (BUY, TP: RM7.30),
Malayan Cement (BUY, TP: RM10.00),
Leong Hup (BUY, TP: RM1.07),
Mr DIY (BUY, TP: RM2.13),
99 Speedmart (BUY, TP: RM4.37),
Pavilion REIT (BUY, TP: RM2.00),
Axis REIT (BUY, TP: RM2.17),
Mah Sing (BUY, TP: RM1.49),
Matrix Concept (BUY, TP: RM1.66),
Celcomdigi (BUY, TP: RM3.54),
Hong Leong Bank (BUY, TP: RM30.50),
AMMB (BUY, TP: RM7.47),
Tasco (BUY, TP: RM0.56).
“Meanwhile, with the still current backdrop of uncertainties and cloudy outlook, we are recommending investors to tactically seek cover amongst defensive sectors in case situation turns for the worse,” said MBSB.
While this stability and attractive dividend yields should moderate the downside risks, MBSB is not discounting the potential for price appreciation due to undervaluation as we have observed defensive sectors also being a bit of a laggard.
Their top picks as highlighted in their quarter two 2026 update are:
YTL Power (BUY, TP: RM4.94),
Ranhill (BUY, TP: RM2.29),
Tenaga Nasional (BUY, TP: RM16.40),
QL Resources (BUY, TP: RM4.28),
AMMB (BUY, TP: RM7.47),
Leong Hup (BUY, TP: RM1.07),
Mr DIY (BUY, TP: RM2.13),
99 Speedmart (BUY, TP: RM4.37),
Pavilion REIT (BUY, TP: RM2.00).
—Apr 10, 2026
Main image: news.cgtn.com
