By Chee Jo-Ey
IT has been a turbulent year for Malaysia’s economy. Global uncertainties have continued to haunt the local stock market while economic growth has been sluggish.
This year, like many others, began with some positivity, however. The first quarter saw positive economic news flowing into the market.
Sovereign wealth fund Khazanah Nasional Bhd had come off a successful divesting of a 16% stake in IHH Healthcare Bhd to Japan’s Mitsui & Co Ltd in November 2018, allowing it to raise RM8.42 bil cash for new investments and capital requirements.
The economy also did surprisingly better than economists’ forecast of 4.3% and had grown 4.5% in the first quarter ended March 31.
May brought some good news as well such as the proposed merger of Norway’s Telenor ASA and Axiata Group Bhd’s Asian telecommunication assets, one of the most anticipated projects in town. However, the merger hit a brick wall and talks were called off in September due to complexities involved.
As the year progressed, things took a turn and global uncertainty became a key theme as the US and China trade dispute was further exacerbated by tariff impositions.
The Hong Kong protest, which began as a peaceful rally in March to fight plans to allow extradition to mainland China, had exploded beyond control as we reached the second half of the year.
Volatility became the buzzword of analysts and market observers to describe various global and local events. The FBM KLCI lagged behind its peers and it was also a tough year for the ringgit and stock market indices.
Meanwhile, foreign investors have been continually dumping local equities at a steady rate.
By Dec 6, year to date foreign net outflow from Malaysia had hit RM10 bil with 33 weeks recording foreign net selling.
Recent developments on the geopolitical scene point to a challenging outlook for the capital market in the near future. These uncertainties will continue to cast a shadow on investor sentiment in the Malaysian equity market.
MIDF Research forecast the economy to continue expanding in 2020 but at a slower pace of 4.5% yoy compared to 4.6% yoy estimated for 2019 as there are more challenges ahead. Slowing global demand, recession fears, rising protectionism and loss of growth momentum of world’s major economies are among the factors.
It certainly did not help that on Nov 15, Bank Negara Malaysia had also announced that GDP growth had declined to 4.4% in the third quarter from 4.9% in the second quarter of 2019. – Jan 12, 2020
