Sabah state election may boost construction and property stocks—MBSB Research

• Construction firms could benefit from promised public works, while property developers may gain from housing initiatives tied to job creation.

KUALA LUMPUR (Oct 7): The dissolution of Sabah's 16th state assembly has set the stage for a state election that could significantly impact the construction and property sectors, said MBSB Research in a note on Tuesday.

With 73 seats at stake, the outcome will test the unity government's popularity amid Sabah's fluid political landscape.

"Many quarters will likely see the outcome of the state election as a gauge of the support for the unity government," said the research house.

Historically, MBSB said state elections have limited direct impact on broader market indices like the FBM KLCI, which shows mixed pre-election performance. 

For example, there was a relief rally in 2013 after the concerns that there might be a change of government then but Barisan Nasional eventually won, and poor market performance in 2008 and 2018 due to negative surprises. 

"As such, state elections will likely have even less of an influence on market performance. We postulate that investors are now more concerned about the resultant (political, societal, and economic) stability post-election, and less on pre-election goodies and promises," said the research firm.

Nonetheless, MBSB said Sabah-focused stocks may experience sentiment-driven interest as campaigns highlight infrastructure pledges and development agendas. 

Construction firms could benefit from promised public works, while property developers may gain from housing initiatives tied to job creation. Plantation operators also face potential implications from land policy discussions during the campaign period.

Investors are advised to monitor post-election stability rather than pre-election promises, as market reactions have historically been more pronounced after results are finalised. 

While the port and logistics sectors might see secondary effects from infrastructure talks, sustainable gains will depend on post-election policy implementation.

The house cautioned against overestimating election-driven rallies but noted selective opportunities in Sabah-centric companies aligned with state development goals. 

The election's timing — a month ahead of the automatic dissolution date—suggests strategic positioning by incumbents, though local issues typically dominate regional polls, it added.

As campaigns intensify, sectors tied to state budgets and resource allocations may see heightened volatility through December.

On Monday, Chief Minister Datuk Seri Hajiji Noor confirmed the dissolution after meeting with Governor Tun Musa Aman, initiating a 60-day countdown for the 17th state election to be held by Dec 5, 2025. 

The current seat distribution shows Gabungan Rakyat Sabah holding 35 seats against Warisan's 14, with Barisan Nasional (12), Pakatan Harapan (seven), and smaller parties dividing the remainder.

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