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Market Highlights
Economic Update
Mon, 20 May 2024 07:48 am
Gross Domestic Product (GDP) - 1Q24: Malaysia’s Economy Off to a Strong Start

Substantial growth observed in the latest quarter. In the first quarter of 2024, Malaysia’s Real GDP expanded by +4.2% yoy, a significant improvement from the preceding quarter (4Q23: +2.9% yoy, mainly driven by the services and manufacturing sectors. This aligns with the Economic Outlook for ASEAN countries, standing at 4.5% according to IMF. Following seasonal adjustments, the Malaysian economy saw a quarterly increase of +1.4% qoq (vs 4Q23 at +1.0% qoq), meeting both market and our in-house expectations ranging from +4.3% to +4.1% yoy. The favourable performance from the services sector, coupled with expansion in the manufacturing sector, as well as increased household final consumption expenditure and gross fixed capital formation, largely contributed to the said growth.


Improved employment rate stimulates household spending. Malaysia’s economy grew by +4.8% yoy and +5.0% yoy in January and February, respectively, but easing in March to +2.9% yoy. Higher household consumption expenditure, buoyed by stable labour market conditions and a low unemployment rate (1Q24 was at 3.3% compared to 3.6% in 4Q23), supported the economy. Festive seasons, the start of the 2024 school sessions, and government incentives attributed to increased household spending. Additionally, a surge in tourist arrivals boosted tourism-related activities. Economic performance was further bolstered by large-scale projects, data center investments, and improvements in the application period for foreign workers, particularly in the plantation sector. Throughout the quarter, the services and manufacturing sectors drove economic growth on the supply side, while private final consumption expenditure and gross fixed capital formation were key drivers of demand.

Economic Update
Mon, 19 Feb 2024 07:55 am
GDP 4Q23: Looking forward external demand to support 2024’s growth

Another quarter of subpar growth. Malaysia 4Q23 Real GDP expanded +3.0% yoy, marking a slight slowdown (vs 3Q23: +3.3% yoy) recorded in the preceding quarter, primarily due to declining exports. Full-year GDP for 2023 recorded slight growth of +3.7% yoy. While the said growth rate was sharply lower against +8.7% yoy recorded in 2022, the figure was in tune with the average across ASEAN countries. Considering seasonal adjustments, the Malaysian economy rose +2.0% qoq (vs 3Q23: +2.36%). The aforementioned performance fell below both the markets’ and our in-house expectations, which ranged from +3.4% to +3.5% yoy. This was mainly attributed to sluggish exports throughout the quarter, stemming from persistent weakness in external demand, coupled with robust imports.

Sluggish trade performance. In October to December period, Malaysia’s exports fell by -6.3% yoy, while imports declined -2.9% yoy. This led to a -3.2% yoy decrease in trade, with the trade surplus contracting approximately 46% yoy. On a brighter note, household spending remained the key driver of Malaysia’s economy, supported by an improved labour market and easing cost pressures (the unemployment rate in 4Q23 was at 3.6% compared to 3.4% in 3Q23). Meanwhile, on the supply side, the Services sector remained as the primary driving force behind economic growth, while all other sectors, except for Manufacturing, saw positive growth. Private final consumption expenditure and Gross fixed capital formation were the main driving forces on the demand side.

Market Outlook
Tue, 02 Jan 2024 08:47 am
1H24 Market Strategy - Ascending into the Year of Dragon

Summary

• Execution of key blueprints laid out in 2023 will be the key focal point to drive economic reformation, while the prospects of corporate earnings growth will entice market participants into the equity markets.
• Amidst the prospects recovery alongside with interest rate cuts from US that may drive investor back into emerging markets, we advocate investors to turn slightly aggressive with selective sector to be in focus such as construction, property, technology and healthcare.
• We also favour the renewable energy (RE) sector on the back of the various incentives to spur business to adopt more green and sustainable measures, coupled with tourism sector that will ride onto the full-blown recovery in global travel.
• Our 2024F and 2025F year-end target for FBM KLCI are 1,560 and 1,650 respectively, based on assigned 14.0x PE multiple.

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