Bursa Malaysia Category: Which to Invest in 2024
As we look ahead to 2024, investors are exploring profitable opportunities within the Bursa Malaysia. The Main Market is the primary market for larger companies with strong operating and profit track records. With the Bursa Malaysia exhibiting a range of thriving sectors, it is crucial for investors to identify the optimal Malaysia stock category in which to invest. Each Malaysian stock category presents unique prospects amidst the nation’s steady economic growth and progressive market reforms, from the robust financial sector to the consistently performing industrial processing segment. Let us take a closer look at which Malaysia stock categories are expected to perform well in the coming year, offering significant potential for returns.
Why Invest in the Bursa Malaysia Share Market?
In the current wave of globalization, the Malaysian stock market stands out, captivating global investors with its distinct appeal. The Bursa Malaysia KLCI Index (.KLSE.MY) has been particularly impressive in 2024, hitting a three-year high of 1638.29 points on July 19th and boasting a year-to-date increase of over 12%. This surge signals a dynamic and promising investment landscape.
This year, the daily trading volume on the Malaysian exchange has not only surpassed the 10-year average of 3.8 billion shares but has reached 4.6 billion shares, with a notable leap to 5.6 billion shares per day since May. This uptick in trading volume reflects a bullish market sentiment and enhanced liquidity, offering a wealth of investment opportunities.
Analysts are also bullish on the Malaysian market's prospects. Kenny Yee, Research Director at Malacca Securities, anticipates further growth in trading volumes as government-linked investment companies (GLICs) bring back funds from overseas. On July 17th, Audrey Goh Sze Chieh from Standard Chartered Bank Malaysia echoed this optimism, suggesting that the anticipated easing of U.S. Monetary policy and growing interest from foreign investors could drive positive market movement in the second half of this year.
As the global economy rebounds and capital flows intensify, the Malaysian stock market is poised to attract a new wave of investment. This article delves into the Malaysian stock market's multifaceted appeal, uncovering the investment rationale and opportunities that could guide your investment choices.
Ideally Situated
Malaysia is ideally positioned just north of the equator, at the heart of South-East Asia. Nestled between the Indian Ocean and the South China Sea, the country enjoys robust connectivity through major air and shipping routes. As a pivotal node on the 21st Century Maritime Silk Road, and neighbor to the crucial Malacca Strait, Malaysia stands as a hub for international trade and logistics. This strategic position bolsters the performance of logistics, port operations, and shipping-related companies on Bursa Malaysia, attracting investors with its efficiency in global supply chain management. Malaysia's central role also elevates its status as a regional financial center, drawing numerous multinational corporations to establish their regional headquarters. This, in turn, stimulates demand in financial services, real estate, and consulting, positively impacting the stock market performance of companies in these sectors.
Abundant Natural Resources
Rich in natural resources such as palm oil, natural rubber, tin, natural gas, and timber, Malaysia's economy is robustly supported by these commodities. The presence of these industries on the Bursa Malaysia stock exchange diversifies investment opportunities, allowing investors to spread risk across various sectors. As one of the world's leading producers and exporters of palm oil, Malaysia benefits from stable global demand for this commodity, providing a reliable stream of overseas revenue and steady cash flow for companies. This stability is a draw for investors seeking regular dividends and capital preservation. The nation's natural wealth not only underpins its economic foundation but also delivers steady growth to the stock market, capturing the attention of both domestic and international investors.
Solid Economic Foundation
With a diversified economy that includes manufacturing, services, agriculture, and resource extraction, Malaysia has demonstrated a resilient economic growth trajectory. The government's proactive promotion of high-value industries like electronics, medical devices, biotechnology, and financial services has made the Malaysian stock market increasingly appealing to investors seeking growth and innovation. The depth and liquidity of the market are enhanced, boosting its long-term attractiveness. On July 19th, data from the Department of Statistics Malaysia revealed that the country's GDP rose by 5.8% year-on-year in the second quarter of 2024, exceeding market expectations of 4.7%. This figure underscores Malaysia's strong economic performance during the period.
Government Support
As a signatory to the Regional Comprehensive Economic Partnership (RCEP), Malaysia is part of an expansive trade area that encompasses 30% of the global population and economic output. This membership provides robust support for economic recovery and an optimized investment climate. With 13 free trade agreements, including one with ASEAN that ensures 98% of products enjoy zero import tariffs, Malaysia boasts extensive trade connections. These agreements reduce business costs and enhance the competitiveness of its enterprises.
The Malaysian government's commitment to the stock market was underscored by the June 2023 announcement to reduce stock stamp duty. This move not only boosted the stock market and currency value but also highlighted a focus on market health. Coupled with a favorable business environment and policies aimed at simplifying company listings and encouraging foreign direct investment, Malaysia is well-positioned to attract investors.
Future Growth Drivers
The Malaysian government has been promoting digitalization and technological advancements, particularly in areas such as e-commerce, fintech, and the Internet of Things (IoT). This push towards technology is not only modernizing local industries but also attracting foreign tech companies to set up operations within the country, which can lead to the listing of new tech-focused firms on Bursa Malaysia. In addition, As global demand for data storage and processing increases, Malaysia is becoming a preferred location for data centers. Major technology giants like Amazon, Google, Microsoft, Nvidia, and ByteDance have shown interest in or already established data center projects in Malaysia. This development not only boosts the technology sector but also catalyzes growth in related infrastructure and support services, potentially leading to new listings and increased market activity.
The Malaysian stock market's robust performance in 2024, driven by strategic location, natural resources, a strong economy, and government initiatives, positions it as an attractive investment destination. Its embrace of digitalization and technology, along with supportive trade policies, further enhances its appeal to global investors looking for growth opportunities.
What Are Stock Categories?
Stock categories classify stocks based on criteria like market capitalization, financial performance, growth potential, and dividend yield.
Understanding stock categories is crucial for investors to create a diversified portfolio aligned with their risk tolerance and financial objectives.
Investors seeking stable returns may opt for high-dividend-yield stocks, while those with higher risk tolerance may choose growth stocks with potential for rapid appreciation.
It is crucial for investors to understand the differences between different stock categories and create a diversified portfolio, thereby achieving long-term investment success.
Overview of Malaysia Stock Categories
Explore the Malaysian stock market and gain insight into various Malaysian stock categories. The ACE Market is significant for companies looking to be listed in the Malaysian equity market. From blue-chip stocks to solid dividend stocks to leaders in niche areas, each Malaysian stock category mentioned below has its own distinctive characteristics.
Blue-Chip Stocks
At the forefront of the Bursa Malaysia are blue-chip stocks, which represent the top tier of publicly traded companies. These are large, well-established companies with a proven track record of stability, profitability, and market dominance. Maybank, PBbank, and CIMB are examples of such companies. With excellent financials and a long history of paying dividends, blue chips offer a sense of security and the potential for stable returns, making them ideal for risk-averse investors.
Stock name | Symbol | Sector | Brief Introduction |
MAYBANK | Finance | Malayan Banking Berhad is Malaysia's largest commercial bank, offering comprehensive financial services, including commercial and investment banking, insurance, and Islamic banking. | |
TENAGA NASIONAL BHD | Utilities | Tenaga Nasional Bhd. is engaged in the business of power generation, transmission, and distribution, providing products and services to commercial, industrial, and residential customers. | |
PUBLIC BANK BHD | Finance | Public Bank Limited provides commercial banking services, including installment payments, retail business, corporate lending, funding and capital market business, investment banking, and fund management. | |
CIMB GROUP HOLDINGS BERHAD | Finance | CIMB Group Holdings Bhd. is engaged in financial and banking services covering Personal Banking, Commercial Banking and Wholesale Banking as well as CIMB Digital Asset and Group Financing. | |
IHH HEALTHCARE BERHAD | Health Service | IHH Healthcare Bhd is an investment holding company providing healthcare services. It operates through segments such as Singapore, Malaysia, India, Greater China, PPL Other Acibadem Holdings CEE, IMU Health Malaysia, PLife REIT and others. | |
PRESS METAL ALUMINIUM HOLDINGS BERHAD | Producer Manufacturing | Press Metal Aluminium Holdings Bhd is engaged in the aluminium production business, which was established in 1986 and is headquartered in Shah Alam, Malaysia. Business activities include smelting, manufacturing and trading of aluminium products. | |
PETRONAS CHEMICALS GROUP BHD | Process Industries | PETRONAS Chemicals Group offers a range of products including basic chemicals, specialty chemicals, fertilisers and polymers. The company has operations in Malaysia as well as in the global market and is one of the leading integrated chemical producers in Southeast Asia. | |
YTL POWER INTERNATIONAL BHD | Utilities | YTL Power International BHD provides telecommunication services and infrastructure services such as power generation, water supply and sewerage. There are also sales of electricity to wholesale and retail markets, as well as petroleum trading and tank leasing. |
Growth Stocks
Growth stocks are companies expected to grow significantly higher than the market average, usually in emerging or innovative industries. These companies usually reinvest their profits into their business without distributing dividends to shareholders. Such stocks have future growth potential but are riskier because of their dependence on continued innovation and market penetration.
Stock name | Symbol | Sector | Brief Introduction |
ARK RESOURCES HOLDINGS BERHAD | Industrial Service | ARK Resources Holdings Bhd's line of business includes real estate development, civil engineering, and building construction. It also provides related management services. | |
CATCHA DIGITAL BERHAD | Commercial Service | Catcha Digital Bhd. engages in online social media, online advertising, content and publishing. | |
SMTRACK BERHAD | Electronic Technology | SMTrack Bhd. is involved in the business of designing, deploying and distributing RFID tags and other labeling solutions using information technology broadband networks. It also provides training, maintenance and related consultancy services. | |
LAMBO GROUP BERHAD | Distribution Services | Lambo Group Bhd provides information technology related products and services. Its business operations involve wholesale of footwear products, IT consulting and e-commerce services and logistics. | |
ACME HOLDINGS BERHAD | Finance | ACME Holdings Bhd engages in the business of real estate development and property rental. The other segment covers investment holding activities. | |
LIM SEONG HAI CAPITAL BERHAD | Distribution Services | Lim Seong Hai Capital Bhd provides construction materials, lighting products and related electromechanical products and services. It also engages in hardware and tools and machinery rental business. | |
G3 GLOBAL BERHAD | Technology Services | G3 Global Bhd is engaged in the manufacturing, design and distribution of apparel. It operates through the business units of Apparel, Investment Holdings and Information and Communication Technology (ICT). | |
VARIA BERHAD | Finance | The company provids architectural and engineering services. The business covers construction and engineering, real estate investment, maintenance, facilities management and services, oil and gas, real estate development and others. |
Dividend Stocks
Dividend stocks in the Malaysian stock market are a prime choice for investors looking for regular income. In Malaysia, utility companies, telecommunication giants, and some established real estate developers are known for their consistent dividend payouts. These stocks tend to be in well-established industries with stable cash flows that act as a hedge against risk.
Stockname | Symbol | Sector | Brief Introduction |
FAVELLE FAVCO BHD | Producer Manufacturing | Favelle Favco Bhd engages in the manufacture, supply, service and rental of offshore oil and gas pedestal cranes, tower cranes, shipyard cranes and other heavy lifting equipment cranes. The company also provides design, engineering an, and rental of offshore oil and gas pedestal cranes, tower cranes, shipyard cranes, and other heavy-liftingd maintenance services for integrated automation solutions, process analyzers and specialized equipment for various industries. | |
UOA DEVELOPMENT BERHAD | Finance | UOA Development Bhd. is a company engaged in the real estate business. Its business activities cover the development and construction of residential and commercial properties. Others include hotels, healthcare, training services, and holding of investment properties for rental income, among others. | |
TEXCHEM RESOURCES BHD | Distribution Services | Texchem Resources Bhd's business scope covers Industrial, F&B, Polymer Engineering, Food, Venture Capital, and more. Specifically integrated sourcing and distribution solutions for polymers, plastic resins, industrial chemicals, food additives, dyes, and textile chemicals. As well as providing seafood processing marketing and aquaculture activities. | |
APOLLO FOOD HOLDINGS BHD | Consumer Non-durables | Apollo Food Holdings Bhd. engages in manufacturing activities of compound chocolate, chocolate confectionery products and cakes. In addition, it provides related marketing and distribution services. | |
GOLDEN PHAROS BHD | Producer Manufacturing | Golden Pharos Bhd's business activities include timber drying, sale of logs and logging compartments. As well as manufacturing and trading glass, veneer and wood chips. It is also involved in investment holding and property leasing. | |
ZHULIAN CORPORATION BHD | Producer Manufacturing | Zhulian Corp. Bhd. is engaged in the manufacture and sale of costume jewelry and consumer products on a direct selling basis. The company has branches in Malaysia, Singapore, Thailand, Cambodia and Myanmar. |
Small-Cap Stocks
Small-cap stocks refer to companies with small market capitalization, which typically operate in niche markets or are in the early stages of growth. Several small-cap companies are expected to be listed on the ACE Market by Jul 2024. These stocks have room for significant expansion but are also vulnerable to market volatility and economic downturns. While small-cap stocks can deliver exponential returns, they are inherently volatile and must be examined carefully. Savvy investors usually look for undervalued gems in this sector.
Stock name | Symbol | Sector | Brief Introduction |
RED IDEAS HOLDINGS BERHAD | Technology Services | Red Ideas Holdings Bhd. is a company engaged in the development of mobile applications for security and communications. The company was founded in 2013 by Kah Seong Foo, Tzin Sung Ho, and Tan Chung Loke and is headquartered in Petaling Jaya, Malaysia. | |
MERIDIAN BERHAD | Finance | Meridian Bhd is principally engaged in the business of real estate development, and construction. The company's business comprises property development, construction, real estate investment and others. It is also involved in project management services, construction contractors, cloud consulting services, and hosting services for enterprises' operation of parking lots in commercial properties. | |
CLOUDARON GROUP BERHAD | Technology Services | Cloudaron Group Bhd provides information technology software services and hardware operations. The company's business activities include cybersecurity operations, systems and cloud consulting services and hosting services for enterprises, while bringing together digital services for computer programs and hardware operations for related facilities. | |
MQ TECHNOLOGY BHD | Producer Manufacturing | MQ Technology Bhd is an oroducer manufacturing company engaged in the design, development, and manufacture of molds, tools, jigs, precision tools, and magnetic coils. | |
NEXGRAM HOLDINGS BERHAD | Distribution Services | Nexgram Holdings Bhd is a company engaged in the research and development of telecommunications software solutions. The company's business activities include investment holding, information technology services (ICT), real estate investment, logistics and healthcare. | |
KEY ALLIANCE GROUP BERHAD | Consumer Durables | Key Alliance Group Bhd is an investment and real estate holding company engaged in the provision of communication systems integration and solutions, data networks, data communication solutions, and business and operational support systems. The company operates in the areas of data center and cloud services, trading, construction and others. | |
CME GROUP BHD | Consumer Durables | CME Group Bhd. engages in the manufacture, sale and maintenance of fire and safety vehicles, equipment fire trucks and spare parts. The manufacturing business includes the design, manufacture and sale of specialized motor vehicles and equipment. The trading business includes the sale and servicing of fire-fighting gas systems and safety-related products. | |
ANNUM BERHAD | Non-energy Minerals | Annum Bhd is a company engaged in the manufacture and sale of plywood products. The company's products include raw plywood, customized plywood, decorative veneer cladding products, musical instrument components and furniture components. It also provides barge chartering services, decorative plywood trading and log extraction services. |
Sector-Specific Stocks
Bursa Malaysia has a wide range of sector-specific stocks that align with global trends and domestic priorities. One of the strong-performing sectors in Malaysia is the industrial products & services sector. Based on the data, Malaysia’s strong-performing sector stocks are mainly concentrated in the financials, process industries, and utilities. Investors can capitalize on industry-specific trends by focusing on sectors with strong fundamentals or growth prospects.
Sector | Constituent Stocks |
How to Choose the Right Malaysia Stock Category for 2024
Plunging into Malaysia's stock market and choosing the right category requires a strategic vision. There are key factors and expert insights for selecting the optimal Malaysian stock category tailored to ensure a robust portfolio:
Track Macro-Economic Trends
Start by studying the country's macroeconomic outlook for the year 2024. Consider factors such as GDP growth forecasts, inflation rates, and central bank policies. These indicators will set the tone for the overall state of the Malaysian stock market. For example, if infrastructure spending is expected to increase, construction and materials stocks within the Malaysian stock market could become more attractive.
Evaluate Sector Performance
Analyze the history of the Malaysia stock market and forecast sector performance. Focus on expected growth sectors such as emerging technologies, new energy, or healthcare, which will likely thrive in the global shift towards digitalization, sustainability, and health consciousness. Utilize industry reports and market analysis to identify Malaysia stock categories with sustained earnings growth and a positive outlook.
Consider Market Valuations
Compare the valuations of different Malaysia stock categories. Use metrics such as price-to-earnings (P/E) ratios and price-to-book (P/B) ratios to assess whether a sector is undervalued or overvalued compared to its historical average and industry peers. A sector with a low valuation may indicate that the stock is undervalued by the market, and there may be a good opportunity to buy. Conversely, a high valuation may suggest the stock is overvalued, and there is a risk of a price correction.
Dive into Company Fundamentals
Once you have identified promising Malaysia stock categories, it is advisable to delve into the financial health of individual companies listed on the Bursa Malaysia. Accessing real time market data is crucial for evaluating company fundamentals accurately. Seek for companies with strong balance sheets, consistent revenue growth, healthy cash flows, and a competitive edge in their respective markets. Additionally, pay attention to management quality and corporate governance
Monitor Policy Changes
Ensure you are kept informed of any regulatory changes and government policies that could impact specific Malaysia stock categories. Tax incentives, utilities, or new regulations can influence the landscape for industries such as renewable energy, telecommunications, or e-commerce. Staying updated on these changes from the Bursa Malaysia and rep financial news can help you anticipate which companies will be the winners and losers in the Malaysia stock market.
Assess Risk Tolerance
It is important to assess personal risk appetite when selecting a Malaysia stock category. High-growth sectors may offer the potential for greater returns but carry increased volatility. Conversely, defensive sectors such as utilities or consumer staples tend to be more stable, though they may provide lower returns. The key to successful investing is aligning your choices with your financial goals and capacity to tolerate volatility.
Diversify Portfolio
Finally, remember not to put all your eggs in one basket and avoid overreliance on any single investment. Even within a specific Malaysia stock category, diversification across several companies can help to mitigate risks. To achieve a more balanced portfolio and capitalize on the diverse opportunities the Malaysian stock market presents, you should diversify your investments across multiple sectors.
By following these steps, investors can make informed decisions when choosing the most suitable Malaysia stock category for 2024, positioning themselves for potential growth while managing risks effectively.
Conclusion
In 2024, the Malaysian stock market presents an increasingly prosperous investment landscape, with each stock class having distinct advantages. By maintaining a high vigilance, conducting comprehensive research, and aligning your strategy with your objectives, investors can successfully navigate the Malaysia share market and reap its rewards.