ASPI to trade sideways through 2026 before eyeing 24,500 recovery next year

The All Share Price Index (ASPI) is projected to follow a sideways trading pattern within the 9.0x to 10.0x price-to-earnings (PER) bands for the remainder of 2026, heavily constrained by the muted market volumes and highly attractive fixed-income yields. 

Maintaining its 2026 base-case fair value target at 20,000 to 21,000, First Capital Research (FCR) warned that the index remains vulnerable to external shocks. 

In a downside scenario, where the Middle East tensions flare up again, triggering high oil prices and deeper exchange rate stress, a temporary derating could push the index down into a bear-case range of 18,000 to 19,000. Conversely, if the global conditions remain stable, a bull-case target of 22,000 to 23,000 is achievable within the year.

A stronger market recovery is expected in 2027, with FCR setting a base target of 24,500 for the ASPI. This positive outlook is driven by a projected 14.0 percent jump in corporate earnings and a potential 50-basis-point interest rate cut, which should encourage the investors to shift their funds from fixed deposits back into the stock market. 

Based on this recovery, the market would return to its historical average valuation, reaching a fair value range of 24,000 to 25,000. If the economic conditions improve faster than expected, an even more optimistic scenario could drive the index to a peak range of 26,000 to 27,000.

Against this backdrop of near-term volatility and deferred recovery, FCR has downgraded its tactical investment strategy for the current year. The research house advocates for a defensive portfolio posture, advising the institutional and retail investors to reduce their equity exposure to 50 percent, down from 65 percent previously.