Top Financial News of 2024
Malaysian Equities and Currency Experience a Revival
In a significant turnaround, Malaysia’s financial markets displayed remarkable resilience throughout 2024, marking a revival in investor sentiment following years of political instability that once had dampened prospects for economic growth and business stability. The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) notched a compelling annual gain of 12.58%, representing the best performance for the index since 2010. This recovery is notable, given that Malaysia had been dubbed the "world’s worst major market" back in 2019. The robust performance of Malaysian stocks was further highlighted when the market capitalisation broke the RM2 trillion threshold for the first time in May. Contributing factors included impressive corporate earnings, renewed foreign investments, and optimistic indicators regarding Malaysia’s economic trajectory, particularly in light of better-than-anticipated trade data.
Key players in this upward trend included notable companies such as YTL Power International Bhd, Tenaga Nasional Bhd, and CIMB Group Holdings Bhd. The FBM KLCI was trading at a higher valuation multiple of 15.7 times forward Price Earnings Ratio (PER), outpacing its three-year average of 14.3 times as of December 30. Additionally, the Malaysian ringgit experienced a substantial uptick, appreciating by as much as 11.4% to an intra-year high of 4.124 against the US dollar in September. Although it later moderated to trade at 4.472 due to slower interest rate cuts in the United States, it still showed an overall year-to-date appreciation of 2.84%. A crucial impetus for these shifts was Bank Negara Malaysia’s strategic encouragement for local businesses to repatriate overseas investment income and convert export proceeds to ringgit.
Despite a rocky start to the year, which saw sharp declines in stocks linked to investor Datuk Dr. Yu Kuan Chon—where Rapid Synergy Bhd lost 95% of its value in January—the market stabilized by February, paving the way for a stellar performance.
Controversy Surrounds MAHB’s Proposed Privatization
In March, Malaysia Airports Holdings Bhd (MAHB) received a noteworthy 35-year extension to its concession for managing the country’s 39 airports, extending the contract from 2034 to 2069. Following this extension, in May, MAHB was approached by a consortium led by Khazanah Nasional Bhd and the Employees Provident Fund (EPF), offering to take the airport operator private at RM11 per share.
The deal’s structure suggests that Khazanah’s stake in MAHB would increase to 40%, while EPF’s share would grow to 30%. However, controversy arose due to Global Infrastructure Partners’ (GIP) association with BlackRock, prompting protests rooted in allegations regarding BlackRock’s alleged pro-Zionist stance.
Despite the objections, the Malaysian government supported the privatization plan as a means to enhance MAHB’s prospects. While independent directors at MAHB advised against accepting the offer, citing it did not reflect the true potential of the company, independent advisers like Hong Leong Investment Bank recommended acceptance, although they deemed the valuation unfair.
U Mobile’s 5G Network and Shareholding Issues
U Mobile Sdn Bhd was selected to spearhead the rollout of Malaysia’s second 5G network, a decision that incited significant debate. The Malaysian Communications and Multimedia Commission (MCMC) justified its choice of U Mobile over larger rivals by pointing to its robust track record, though transparency surrounding the selection process was questioned.
Furthermore, concerns about foreign interference emerged due to U Mobile’s largest shareholder being Temasek, a state-owned investment firm from Singapore. To alleviate these fears, Temasek announced plans to reduce its stake in U Mobile from 48.25% to 20%. However, conflicting reports suggested that Temasek may still have a significant influence in the company.
Push for Sarawak’s Gas Control
In another development, Sarawak has sought expanded control over its considerable gas resources. Currently, the national oil company Petronas manages gas distribution across the state, but there is a strong push for Petroleum Sarawak Bhd (Petros) to take over this function.
While many endorse Sarawak’s move to enhance local control over gas resources, critics have raised concerns about possible repercussions on Petronas and the federal government, given the company’s central role in providing dividends to the treasury. Prime Minister Datuk Seri Anwar Ibrahim has clarified that the government does not endorse a complete handover of gas supply control to Petros.
Teh Family Moves to Sell LPI Stake to Public Bank
Public Bank Bhd made headlines in October when it announced a deal to acquire a 44.15% stake in general insurer LPI Capital Bhd from the family of its late founder, Tan Sri Teh Hong Piow, for RM1.72 billion. This acquisition propelled Public Bank into mandatory takeover territory for LPI Capital, which has a share price of RM9.80. In tandem with this sale, it was revealed that the Teh family intends to reduce its stake in Public Bank from 23.41% to 10% over the next five years, aiming to comply with the Financial Services Act 2013. Although this adjustment would diminish their position to the second-largest shareholder, the family remains the largest shareholder in the bank, with the Employees Provident Fund (EPF) holding the top slot.
Data Centre Investments Surge in Malaysia
Finally, 2024 witnessed over RM75 billion in investment inflows for data centres across Malaysia. This influx is expected to boost the local economy significantly and enhance Malaysia’s position as a regional data centre hub, as global technology giants like Amazon Web Services, Microsoft, and Google continue to set up substantial operations in the country.
These developments not only signify a shift in investment focus but also reflect growing confidence in Malaysia’s economic landscape, positioning the nation as a critical player in the rapidly evolving digital economy.
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