Top Financial News of 2024: A Year of Recovery and Controversies in Malaysia
Investor Confidence Returns to Malaysian Markets
In a remarkable turnaround, the Malaysian financial landscape witnessed a strong recovery in 2024, following a tumultuous period of political uncertainty that plagued the nation’s economic policies in previous years. Once labeled as “the world’s worst major market” in 2019, the FTSE Bursa Malaysia KLCI (FBM KLCI) recorded an impressive gain of 12.58% in 2024, marking its best performance since 2010. This rally led to the market capitalisation of Malaysian equities surpassing the RM2 trillion milestone for the first time in May, fueled by robust corporate earnings, renewed foreign investment, and optimistic trade data.
Several key players were at the forefront of this positive trend, including YTL Power International Bhd, Tenaga Nasional Bhd, and CIMB Group Holdings Bhd. By the end of the year, the benchmark index was trading at a higher valuation multiple of 15.7 times forward price-to-earnings ratio, compared to an average of 14.3 times over the previous three years.
The ringgit also saw substantial gains, appreciating by 11.4% to reach an intra-year high of 4.124 against the US dollar in September. Despite some fluctuations due to slower interest rate cuts in the US, the currency remained up by 2.84% year-to-date, bolstered by Bank Negara Malaysia’s push for local businesses to repatriate overseas income and convert export proceeds back to ringgit.
Notable setbacks marked the start of the year, particularly involving stocks linked to investor Datuk Dr Yu Kuan Chon, such as Rapid Synergy Bhd and YNH Property Bhd, which sustained significant losses. However, by February, stability was restored, paving the way for a fruitful year for Malaysian equities.
Controversy Surrounds MAHB’s Privatisation
In a significant move, Malaysia Airports Holdings Bhd (MAHB) announced a 35-year extension to its concession for managing the nation’s airports, shortly before revealing a controversial offer from a consortium led by Khazanah Nasional Bhd and the Employees Provident Fund (EPF) to take the airport operator private at RM11 per share.
This privatization proposition raised eyebrows and sparked protests due to concerns about Global Infrastructure Partners’ (GIP) ties to BlackRock, a firm facing accusations from some groups regarding its alleged political motivations. Despite the uproar, the Malaysian government defended the privatisation as a strategic initiative to unlock the potential of MAHB.
However, the independent directors of MAHB expressed skepticism regarding the fairness of the offer, asserting that it did not reflect the company’s full potential amid its positive financial trajectory and growth strategy. An independent advisory firm recommended shareholders accept the offer, citing MAHB’s historically suppressed share price, leading to a complex dynamic in the ongoing discussions.
U Mobile’s Role in 5G Deployment Raises Questions
The selection of U Mobile Sdn Bhd by the Malaysian Communications and Multimedia Commission (MCMC) to spearhead the country’s second 5G network deployment prompted extensive debate. The decision to choose a smaller operator over larger telecom giants was justified by MCMC based on U Mobile’s track record; however, questions regarding the transparency of this selection process lingered.
Complicating matters was U Mobile’s significant foreign ownership, predominantly held by Singapore’s Temasek Holdings, which has led to concerns about foreign influence over Malaysia’s critical telecommunications infrastructure. Following the announcement, Temasek announced plans to reduce its stake in U Mobile to comply with local regulations, adding to the confusion regarding U Mobile’s ownership structure amidst concerns about adherence to foreign shareholding limits.
Sarawak Seeks Control Over Gas Resources
This year, Sarawak’s government pushed for greater control over its abundant gas resources, advocating for Petroleum Sarawak Bhd (Petros) to assume the role of gas aggregator in the state. Currently, this responsibility lies with the national oil and gas giant, Petroliam Nasional Bhd (Petronas). Sarawak is home to 60% of Malaysia’s gas reserves, making this a highly contested issue.
Debates ensued regarding the implications of a shift in control from Petronas to Petros, especially considering the significant revenue Petronas contributes to the federal government. The Prime Minister stated that the decision regarding gas supply and distribution would not solely rest with Petros, reflecting the complexities of reconciling state and federal interests in natural resource management.
Public Bank Acquires LPI Stake Amid Regulatory Changes
In a landmark move within the banking sector, Public Bank Bhd surprised the market by announcing its acquisition of a 44.15% stake in general insurer LPI Capital Bhd from the late founder Tan Sri Teh Hong Piow’s family for RM1.72 billion. This deal marked Public Bank’s return to substantial mergers and acquisitions following its previous activity in 2021. Notably, the Teh family also revealed plans to reduce their stake in Public Bank from 23.41% to 10% over the next five years to comply with regulatory caps on individual holdings in financial institutions, indicating a significant transition within one of the country’s leading banking families’ investment strategies.
Surge in Data Center Investments
In a broader scope, Malaysia saw an influx of over RM75 billion in data center investments, establishing itself as a competitive hub for global tech giants like Amazon Web Services, Microsoft, and Google. This surge in investment is indicative of Malaysia’s growing importance in the digital landscape and its potential to become a vital player in the global technology ecosystem.
Conclusion
The financial landscape of Malaysia in 2024 has been characterized by resilience and transformative changes. As the country continues to navigate complex economic scenarios, these pivotal developments will likely shape its financial future in the years to come.
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