The Malaysian equity market faces four potential headwinds in 2H from external and domestic factors, Hong Leong IB analysts say in a note. These include lingering supply-chain disruptions amid the Iran conflict, hawkish Fed expectations driving strength in the U.S. dollar and pressuring the ringgit, political uncertainty ahead of a possible early general election, they say. Lastly, the proposed expansion of the KLCI to 50 constituents may create a transitory overhang for the existing 30 stocks as their cumulative weights are diluted. However, the analysts expect these challenges to ease by year-end, supporting a market recovery. Hong Leong cuts its end-2026 KLCI target to 1770 from 1790. The KLCI is 0.2% higher at 1667.32. (yingxian.wong@wsj.com)