Top Financial News of 2024: Key Highlights from Malaysia’s Market and Economy
As the world embraces a new year, Malaysia’s financial landscape in 2024 showcased multiple significant developments, marking transformative changes and pivotal moments across various sectors. From the remarkable rebound in Malaysian equities and currency to dynamic shifts in corporate ownership and infrastructure initiatives, here’s a comprehensive overview of the year’s top financial news.
- Malaysian Equities and Currency Stage Best Run in Years
2024 was a standout year for Malaysian equities and the ringgit, as investor sentiment rebounded sharply following years of political uncertainty and economic headwinds. The FTSE Bursa Malaysia KLCI (FBM KLCI) recorded a 12.58% gain—the best annual performance since 2010—helping the market capitalization of Malaysian stocks surpass the RM2 trillion mark for the first time in May.
Key drivers of this rally included robust corporate earnings, a renewed inflow of foreign investment, and optimism stemming from better-than-expected trade data. Notable contributors to the index gains were YTL Power International Bhd, Tenaga Nasional Bhd, and CIMB Group Holdings Bhd. The benchmark index also traded at an elevated forward price-to-earnings ratio (PER) of 15.7 times, above its three-year average of 14.3 times.
The Malaysian currency, the ringgit, experienced a notable appreciation, strengthening up to 11.4% to a peak of 4.124 against the US dollar in September. Although gains moderated toward year-end to a 2.84% increase year-to-date, this was supported by stable domestic fundamentals and Bank Negara Malaysia’s policies encouraging the repatriation of overseas investment income and export proceeds back into ringgit.
The year began with volatility when shares related to investor Datuk Dr Yu Kuan Chon plummeted, sparking concerns that resulted in tighter margin financing rules and a brief sell-off in certain segments. However, market stability returned by February, laying the foundation for the strong upward trajectory.
- Controversial Privatisation of Malaysia Airports Holdings Bhd (MAHB)
Following a 35-year concession extension for Malaysia Airports Holdings Bhd (MAHB) in March, the airport operator announced in May that a consortium led by Khazanah Nasional Bhd and Employees Provident Fund (EPF) had offered RM11 per share to take the company private. Partners Global Infrastructure Partners (GIP) and Abu Dhabi Investment Authority (ADIA) joined the consortium, while the Malaysian government retained special share rights.
The proposal was met with protests, largely focused on GIP’s connection to BlackRock, a firm some critics accused of politically sensitive affiliations. Despite these controversies, the government maintained that privatisation would unlock MAHB’s potential and generate operational improvements.
On December 21, all five of MAHB’s independent directors advised shareholders against accepting the offer, citing that it undervalued MAHB’s financial and growth prospects. Conversely, Hong Leong Investment Bank issued an independent advisory recommending acceptance, describing the offer as reasonable given the company’s subdued share price, although it regarded the valuation as unfair relative to a forecast of RM12.61 to RM13.71 per share.
The consortium maintained its RM11 offer, emphasizing that the independent directors had not adequately factored in MAHB’s past performance challenges and outlook.
- U Mobile’s 5G Leadership Role Sparks Shareholding Scrutiny
A landmark telecommunications development unfolded in November, when the Malaysian Communications and Multimedia Commission (MCMC) selected U Mobile Sdn Bhd to lead Malaysia’s second 5G network deployment. The decision surprised observers as U Mobile is smaller compared to other major telecom operators, prompting MCMC to publicly justify its selection based on U Mobile’s proven track record.
However, concerns about the transparency of the selection process and foreign ownership in critical national infrastructure surfaced. Singapore’s state-owned investment firm Temasek is U Mobile’s largest shareholder, holding 48.25% via subsidiaries. Shortly after MCMC’s announcement, Temasek’s affiliated company ST Telemedia revealed plans to reduce its stake to 20% by selling a majority stake to Mawar Setia, jointly owned by tycoon Tan Sri Vincent Tan and the King’s daughter.
The complexity of shareholding proportions and foreign ownership caps led to confusion and speculation, especially regarding Temasek’s effective ownership potentially reaching up to 71%, which raised questions about compliance with Malaysia’s 49% foreign equity limit in telcos. ST Telemedia affirmed its ownership disclosures were consistent with regulatory filings, although debate in the media continues.
- Sarawak’s Gas Aggregation Dispute
Sarawak’s push for greater control over its substantial natural gas resources made headlines throughout 2024. The state aimed to have Petroleum Sarawak Bhd (Petros) designated as the gas aggregator responsible for procuring and distributing gas within Sarawak, a role presently held by Petronas, the national oil company.
With Sarawak holding 60% of Malaysia’s gas reserves, the move stirred significant debate, weighing the benefits of local empowerment against potential impacts on Petronas and the federal government’s revenue streams. Sarawak’s oil and gas-related revenue surged to over RM6 billion in 2023, a near threefold increase from 2019. Petronas, meanwhile, earned RM81 billion in group profit in 2023, with its gas segment contributing substantially and dividends to the federal government totaling RM40 billion.
Prime Minister Datuk Seri Anwar Ibrahim later remarked that neither he nor Sarawak’s leadership intended for Petros to unilaterally control all gas supply and distribution, underscoring ongoing negotiations aimed at resolving the dispute while safeguarding the broader oil and gas ecosystem.
- Teh Family’s Strategic Stake Reduction in Public Bank Amid LPI Capital Deal
In a notable corporate move, Public Bank Bhd, Malaysia’s third-largest bank by assets, announced in October its acquisition of the entire 44.15% stake held by the family of its late founder, Tan Sri Teh Hong Piow, in insurer LPI Capital Bhd for RM1.72 billion. The transaction, completed in early December, initiated a mandatory takeover offer for the remaining LPI shares.
Concurrently, Diona Teh Li Shian, the late founder’s youngest daughter, disclosed plans to reduce the family’s 23.41% stake in Public Bank to 10% over the next five years. This move aligns with the Financial Services Act 2013’s ownership cap in financial institutions.
Following the reduction, the Teh family would become Public Bank’s second-largest shareholder behind the Employees Provident Fund (EPF), which held nearly 14.8% as of late December. This transition signifies a major shift in Malaysia’s banking shareholding landscape and demonstrates compliance efforts with regulatory frameworks.
- Malaysia’s Emergence as a Data Centre Hub with Over RM75 Billion Investment
Malaysia cemented its position as a regional leader in data center infrastructure, attracting over RM75 billion in investments from global technology giants including Amazon Web Services (AWS), Microsoft, and Google. This surge in interest has fueled numerous land acquisition deals and positioned Malaysia as a burgeoning digital economy hub in Southeast Asia.
The influx of capital into data centers supports the country’s digital transformation, driving demand for advanced facilities to accommodate cloud computing, internet services, and enterprise IT needs. This trend underscores Malaysia’s strategic importance in the global data infrastructure network and promises enhanced economic growth through technology sector development.
Conclusion
The year 2024 witnessed a series of landmark financial developments in Malaysia, from vibrant market recoveries and strategic corporate transactions to infrastructural shifts in telecommunications and energy sectors. Government policies, private sector initiatives, and foreign investments have all played vital roles in shaping a dynamic economic environment. As stakeholders navigate these evolving landscapes, Malaysia stands poised for continued growth and transformation in the years ahead.
For more detailed analysis and updates on Malaysia’s financial sector and economy, stay tuned to Smart Money Mindset.