Malaysian High Dividend Stocks Gain Market Favor, Banking Sector Attracts Foreign Funds

Moomoo News MY wrote a column · Sep 3 06:56

With the recent cooling of the U.S. labor market and a decline in inflation, expectations for a Federal Reserve rate cut in September are rising. This anticipation has softened the dollar and pushed down U.S. Treasury yields, prompting investors to shift their focus to alternative markets in search of higher returns. According to the latest investment strategy report from Nomura Securities, the onset of the Fed's rate-cutting cycle is expected to bolster purchasing in emerging market stocks, leading to an upgrade of Malaysian stocks from "neutral" to "buy."

Malaysian Stocks Lead Asia-Pacific in Dividend Payout Ratio

Beyond the anticipated Federal Reserve rate cuts, high-dividend stocks are garnering investor interest in turbulent markets due to their ability to deliver stable cash flows. Employing a high-dividend strategy provides investors with a relatively stable revenue stream and offers some protection against market volatility.

In Malaysia, many companies sustain high levels of dividends, making Malaysian stocks a prime choice for those seeking reliable income. Within the Asia-Pacific region, Malaysia has maintained an average dividend payout ratio of 68.3% over the past five years, trailing only Australia.

Malaysian High Dividend Stocks Gain Market Favor, Banking Sector Attracts Foreign Funds

Here are the top ten high-dividend stocks in the KLCI index, with four from the financial sector— $RHBBANK (1066.MY)$, $MAYBANK (1155.MY)$, $CIMB (1023.MY)$, and $PBBANK (1295.MY)$ —achieving capital returns ranging from 14% to 46% this year. Additionally, the top ten include stocks from the consumer sector such as $GENM (4715.MY)$, $SIME (4197.MY)$, and $PETDAG (5681.MY)$, the telecommunications sector with $MAXIS (6012.MY)$ and $AXIATA (6888.MY)$, and the transportation and logistics sector represented by $MISC (3816.MY)$.

Foreign Funds Favor High Dividend Banking Stocks

Bursa Malaysia has witnessed a significant influx of foreign capital, recording a net foreign fund inflow of RM2.55 billion in August 2024, marking the highest monthly figure this year. The influx of overseas capital has continued to accelerate, with the past week seeing the highest weekly net purchases by foreign investors in eight years. They net bought RM1.5 billion in Malaysian stocks, marking a third consecutive week of net purchases, with daily transactions consistently positive. Notably,high dividend bankingstocks remain a particular favorite among foreign investors.

According to MIDF Research's weekly fund flow report, the sectors attracting the most net foreign inflows last month were Financial Services (RM3.50 billion), Utilities (RM280.5 million), and Telecommunications & Media (RM209.5 million).