2027 Budget: Consumer stocks poised to win as tax cuts boost spending power

KUALA LUMPUR: The consumer sector is expected to be the main beneficiary of the 2027 Budget supported by expanded individual income tax relief and lower tax rates that could boost the spending power of middle-income Malaysians, said Rakuten Trade Sdn Bhd.

Its head of research, Kenny Yee, said the consumer segment is the ultimate winner from the budget's sweetener overload.

Beyond the extended cash handouts and wider tax reliefs, Yee said the recalibration of personal income tax could unleash potent spending power among middle-income households.

"Having waited more than 10 years for these adjustments, we believe they also provide an overdue 'feel-good' factor for the market," he said in a statement.

According to Rakuten, the government's tax measures could provide approximately five million taxpayers with up to RM1,600 in additional disposable income, potentially supporting consumer spending.

It noted that under the 2027 Budget, the individual income tax relief limit will increase from RM9,000 to RM12,000, while resident individual income tax rates for chargeable income bands of RM70,001 to RM100,000 and RM100,001 to RM150,000 will be reduced by one percentage point.

The minimum wage will also rise from RM1,700 to RM2,000 from June 2027, with micro, small and medium enterprises with annual sales below RM50 million exempted, it said.

Beyond consumer spending, Rakuten Trade regards 2027 as a "year of delivery" for the construction sector.

While no new mega infrastructure projects were announced, the firm said the RM83 billion development expenditure allocation could support ongoing project activity. Sabah and Sarawak will receive a combined RM34.9 billion.

In property, Rakuten noted that eligible first-time homebuyers purchasing homes priced up to RM500,000 qualify for full stamp duty exemption.

The firm said these incentives could support mass-market demand and may benefit developers with relevant exposure.

In addition, Rakuten said utilities and renewable energy also remain in focus, including Tenaga Nasional Bhd's RM15 billion investment to strengthen the national grid.

The firm cautions that a favourable sector outlook does not guarantee gains for individual stocks.

"Company exposure, valuations, cost pressures and the ability to convert opportunities into earnings remain important considerations," it added.