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Market Highlights
Economic Update
Mon, 19 Aug 2024 08:27 am
2Q24 Malaysia Gross Domestic Product - Robust Economic Growth

Summary

Malaysia’s GDP growth accelerated to +5.9% yoy in 2Q24 (1Q24 at +4.2 yoy), and came above advanced estimate of +5.8% yoy. For 1H24, the economy expanded +5.1% (1H23 at +4.1% yoy), which largely on track to meet the Government projection of +4.0%-5.0% for 2024 and surpassed our initial forecast of +4.1% yoy for end-2024.

We expect Malaysia’s Real GDP growth to remain steadfast in 2H24 to end at +5.2% in 2024 vs. 3.6% in 2023, supported by (i) stronger domestic spending, (ii) stability and gradual improving labour market conditions, (iii) progressive income growth, (iv) execution of multi-year projects from approved investments, (v) resumption of global technology upcycle and (vi) recovery in tourism spending. End 2025 target kept unchanged at +4.6% yoy.

Headline and core inflation is projected to inch higher to +2.6% yoy and +2.5% yoy in 2024, which is in line with BNM’s projection of 2.0%-3.5% and 2.0%-3.0% respectively, impacted by the implementation of the diesel subsidy rationalisation and hike of the SST to 8.0%.

With expectations that BNM will maintain OPR at 3.0%, our 2024 year-end projection for USD/MYR is between 4.20-4.30, supported by the prospects of US interest rate cut(s) and steady economic improvements from structural reforms on the domestic front.

Market Outlook
Mon, 01 Jul 2024 07:45 am
2H24 Market Strategy - Navigating the Steady Upward Wave

Overseas developments such as prospects of interest rate cuts, US Presidential election results, along with the impact of removal of blanket subsidies locally will be in focus moving into 2H24.
Turning less aggressive and selective following the stellar 1H24 performance with preferences skewed towards selective sectors such as construction, property and technology that could demonstrate resiliency in earnings.
We are also upbeat on the (i) transportation & logistics sector that is capitalising onto trade diversion and most players embarking onto expansionary plans, (ii) renewable energy (RE) sector that is riding onto a slew of incentives outlined by policy makers, (iii) tourism sector taking off as the nation prepares for “Visit Malaysia Year 2025” and (iv) data-center supply chain players that are leveraging onto the AI and cloud computing boom.
Our 2024F and 2025F year-end target for FBM KLCI are 1,650 and 1,720 respectively, based on assigned 15.0x PE multiple, which is in line with longterm historical mean average.

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.

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