Top Financial Developments Shaping Malaysia’s Economy in 2024
As 2024 drew to a close, Malaysia’s financial landscape recorded significant milestones and stirred robust debates. From market surges to strategic corporate moves, here are the top financial news highlights that investors and analysts followed closely throughout the year.
- Malaysian Equities and Currency Rally to Multi-Year Highs
Malaysia’s stock market demonstrated a remarkable turnaround in 2024, shaking off a prolonged phase of political uncertainty that had previously clouded investor confidence. The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) delivered a stellar 12.58% gain, marking its best annual performance since 2010 and shedding the negative label of being “the world’s worst major market” as it was dubbed in 2019. Crucially, the market capitalisation of Malaysian equities crossed the RM2 trillion threshold for the first time in May, buoyed by solid corporate earnings and renewed foreign investor inflows. Notable companies driving the rally included YTL Power International Bhd, Tenaga Nasional Bhd, and CIMB Group Holdings Bhd. The FBM KLCI also traded at an elevated forward price-to-earnings ratio (PER) of 15.7 times compared to a three-year average of 14.3, reflecting heightened investor optimism.
The Malaysian ringgit also strengthened significantly, appreciating up to 11.4% at an intra-year peak before moderating to a still healthy 2.84% gain against the US dollar year-to-date. This recovery was supported by Bank Negara Malaysia’s initiatives encouraging businesses to repatriate overseas earnings and convert export proceeds back into ringgit.
Although the year began with turbulence linked to a sharp drop in stocks associated with investor Datuk Dr Yu Kuan Chon and tighter margin financing rules, market stability was restored by February, paving the way for the impressive overall performance seen by year-end.
- Controversy Surrounds Malaysia Airports Holdings’ Privatisation Proposal
Following a 35-year extension granted to Malaysia Airports Holdings Bhd (MAHB) to operate the nation’s 39 airports, a consortium led by Khazanah Nasional Bhd and the Employees Provident Fund (EPF) proposed to take the company private at RM11 per share. This consortium also included Global Infrastructure Partners (GIP) and Abu Dhabi Investment Authority (ADIA), with the Malaysian government retaining a special share.
The proposal sparked controversy, particularly around GIP’s affiliations with BlackRock, which faced criticism over alleged political stances. Despite government assurances that the privatisation was aimed at unlocking MAHB’s growth potential, all independent directors of MAHB urged shareholders to reject the offer, arguing it undervalued the company amid its strong financial outlook.
Contrastingly, Hong Leong Investment Bank recommended acceptance, viewing the RM11 offer as reasonable given MAHB’s suppressed share price, though still below its fair value estimate. The consortium, however, maintained its offer, refusing to revise despite calls outlining the company’s growth prospects.
- U Mobile’s Lead Role in Malaysia’s 5G Rollout Raises Ownership Questions
In a surprising decision by the Malaysian Communications and Multimedia Commission (MCMC), U Mobile was selected to spearhead the country’s second 5G network deployment, besting larger competitors. While the choice was justified by U Mobile’s track record, scrutiny intensified due to foreign ownership concerns, as Singapore’s Temasek Holdings is the largest shareholder.
Temasek holds around 48.25% via its subsidiary, Singapore Technologies Telemedia, but announced plans to reduce its stake to 20% by selling a majority interest to Mawar Setia, jointly owned by tycoon Tan Sri Vincent Tan and the Sultan of Johor’s daughter. The announcement led to confusion over whether foreign ownership limits, capped at 49% in Malaysian telecoms, were breached.
Clarifications from Temasek and ST Telemedia indicated compliance with local regulations, but reports suggested Temasek’s effective stake could be as high as 71%, raising ongoing questions about transparency and national security implications in critical telecommunications infrastructure.
- Sarawak’s Bid to Control Gas Resources Sparks Industry Debate
The state of Sarawak, home to about 60% of Malaysia’s natural gas reserves, intensified efforts to assert greater control over its gas supply through Petroleum Sarawak Bhd (Petros), challenging the role traditionally held by national oil company Petronas as the gas aggregator under the Distribution of Gas Ordinance 2016. Sarawak’s leadership emphasized ambitions to expand affordable gas usage within the state, which recorded a near threefold increase in oil and gas-related revenue from 2019 to 2023. However, this move raised concerns about its impact on Petronas and the federal government, which benefits significantly from Petronas dividends contributing substantially to national revenue.
Prime Minister Datuk Seri Anwar Ibrahim later stressed the need for a balanced approach, signaling that Petros would not have unilateral control over gas distribution. The ongoing discussions are critical in determining the future equilibrium between state and federal interests within Malaysia’s oil and gas ecosystem.
- Teh Family’s Major LPI Capital Stake Sale and Reduction in Public Bank Holdings
In October, Public Bank Berhad surprised the market by announcing 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 Berhad for RM1.72 billion. This deal marked Public Bank’s first major merger and acquisition activity since its 2021 purchase of Hock Hua Bank.
Simultaneously, the Teh family announced plans to reduce its significant 23.41% stake in Public Bank down to 10% over five years through a restricted offer of shares to employees and other shareholders. This initiative aligns with regulatory requirements under the Financial Services Act 2013, which limits individual ownership in financial institutions.
Upon completing the reduction, the Teh family would become the bank’s second-largest shareholder behind the Employees Provident Fund, which holds roughly 14.8%. Despite these changes, Public Bank’s share price remained stable, with the family’s existing stake valued at approximately RM20.77 billion.
- Malaysia Emerges as a Regional Data Centre Hub
Malaysia’s profile as a regional data centre powerhouse strengthened significantly in 2024, attracting over RM75 billion in investments. Global technology leaders, including Amazon Web Services, Microsoft, and Google, expanded their presence, fueling a surge in land deals and infrastructure development to meet Southeast Asia’s growing demand for digital services.
This expansion highlights Malaysia’s strategic positioning in the digital economy, supported by government initiatives and competitive advantages in connectivity and talent, setting the stage for sustained growth in the technology and data infrastructure sectors.
Conclusion
The year 2024 was marked by dynamic shifts across Malaysia’s financial and economic sectors. From the remarkable equity market recovery and strategic corporate transactions to geopolitical sensitivities in telecommunications and energy resource management, these developments reflect Malaysia’s evolving economic landscape amidst global and domestic challenges. Investors, policymakers, and stakeholders will keenly observe how these factors shape the country’s trajectory heading into 2025 and beyond.