Unlocking 2025 Potential | A Guide to Finding Investment Gold in Malaysia

Moomoo News MY joined discussion · Jan 2 15:22

Investors should consider opportunities in utilities and construction stocks related to energy transition and infrastructure, such as TNB, GAM, and IJM; tech stocks benefiting from AI developments, like NATGATE; healthcare stocks with defensive growth, such as IHH; and recovering glove manufacturers, like TOPG. REITs like IGB REIT and KLCC offer long-term investment value.(JP Morgan)

The Malaysian market closed out 2024 with a growth exceeding 12%, significantly propelled by the "Prosperous Economy" framework and other high-value-added policies.

Entering 2025, Malaysia assumes the ASEAN Chairmanship amid challenges from external adverse factors but also sees numerous opportunities. Recently, foreign investment sentiment has strengthened, leading many analysts to anticipate another stellar year for Bursa Malaysia.

Unlocking 2025 Potential | A Guide to Finding Investment Gold in Malaysia

Macroeconomic Overview: Slower Growth, Rising Inflation

Malaysia's GDP surged 8.5% in 2024, far surpassing expectations. However, this growth is forecasted to slow down to 4% in 2025 due to factors like the Sino-US trade war. Inflation averaged 1.8% in 2024 but is expected to rise to 3% in 2025 following partial removals of RON95 fuel subsidies.

Sectors to Watch for Investors

Data Centers: AI-Driven Growth, Dual Engine of Energy Transition and Infrastructure

The momentum in data center construction continues, with major investments announced over the past year by companies like $NVIDIA (NVDA.US)$, $Alphabet-C (GOOG.US)$, $Amazon (AMZN.US)$, $Microsoft (MSFT.US)$, and $Oracle (ORCL.US)$. This marks an exhilarating phase for the tech industry, where AI server deployments present a RM100bn market opportunity.

$NATGATE (0270.MY)$ as Nvidia's sole recognized OEM in ASEAN, stands out amidst the surge in AI data centers. The smartphone and PC markets are expected to recover in H2 2025, driven by advanced Edge AI integration in premium models, boosting semiconductor demand. While Malaysia benefits from Singapore's spillover effects, regional competition intensifies as countries like Thailand attract multinational corporations.

With Malaysia chairing ASEAN in 2025, the NETR (Energy Transition Policy) is set to advance. $TENAGA (5347.MY)$ as the preferred utility stock, is poised to benefit from rising electricity demand and energy transition goals during Regulatory Period 4 (RP4). MIDF remains optimistic about $YTLPOWR (6742.MY)$’s strategic expansion into data centers and views YTLP as a strong potential beneficiary under NETR.

Public projects such as the Penang LRT and Johor LRT are expected to progress, making $GAMUDA (5398.MY)$ and $IJM (3336.MY)$ key beneficiaries in the construction sector. Companies like $GREATEC (0208.MY)$, $INARI (0166.MY)$,and $SUNWAY (5211.MY)$ remain on investors' radar in 2025.

Consumer: Stability Amid Inflation Challenges

Despite lingering external risks, private consumption in Malaysia is projected to remain stable in 2025, supported by seasonal festivals in H1 and government subsidies. However, inflation pressures may increase in H2 2025 due to adjustments in fuel subsidies, potentially threatening consumer spending. Retailers like $MRDIY (5296.MY)$ might face margin pressures from minimum wage hikes and rising costs.

Banking: Stable Credit Growth, IPO Boom

The outlook for the financial sector is relatively stable, with credit growth anticipated at 6-8%, driven by corporate and SME working capital and capex loans, especially in technology, renewable energy, data centers, and infrastructure. Key catalysts include major project launches, the development of the Singapore-Johor economic zone, and Ringgit stability, while risks stem from potential forex volatility and policy delays.

Continued inflows into equity and credit markets bolster the domestic stock exchange, with forecasts of 40-50 IPOs in 2025. JPM analysts favor $CIMB (1023.MY)$ while maintaining a neutral stance on $PBBANK (1295.MY)$ and $MAYBANK (1155.MY)$.

Healthcare: Defensive Growth Shines

Private hospitals highlight the healthcare sector, showcasing defensive growth through increased domestic demand, medical tourism potential, and expansion plans. $IHH (5225.MY)$ leads the industry with brownfield expansions and improved asset returns, with bed numbers expected to grow at a 9% CAGR. Despite some margin pressure, the overall impact is limited. CIMB targets IHH at RM8.60, indicating a potential upside of 18.9%.

Gloves：Tariff Benefits Boost Recovery

The gloves industry is poised for recovery in 2025, benefiting from US tariffs on Chinese gloves, a stronger dollar, and improved supply-demand dynamics. $TOPGLOV (7113.MY)$ with spare capacity, aims to reclaim market share, noting export improvements to the US, up 21% sequentially in Q1 FY2025.

Sales have rebounded since mid-2023, with future gains expected from market share increases and favorable pricing. Kenanga raised $TOPGLOV (7113.MY)$'s target price from RM1.02-RM1.30. Other notable players include $HARTA (5168.MY)$, $SUPERMX (7106.MY)$, and $KOSSAN (7153.MY)$.

Telecom: Intense Competition, 5G Profitability Challenges

The Malaysian telecom sector faces intense competition, with unlimited data plans and broadband price wars pressuring ARPU and revenues. Despite 5G network advancements, consumer willingness to pay for 5G services is low, and enterprise applications lack clear profitability, presenting challenges for operators' 5G-era profit growth.

While the Malaysian market faces external challenges in 2025, resilient domestic consumption, stable policy execution, and ample liquidity provide support. Strategic asset allocation can help investors capture growth opportunities and achieve long-term investment goals.

What are your investment wishes for the new year? Let us know in the comments!

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