Thinking about which sectors to invest in 2022? Property? Palm Oil? Banking? Get to know the best and worst performing sectors in 2021.
2022 started off rocky for most of you invested in the stock market. Global markets are more uncertain with inflation in the U.S. increasing risks for investors. Covid-19 is still around even after 2 years. There are many things to consider.
Which sectors then had a good year in 2021? This article will list out 4 best and 3 worst performing sectors in Malaysia that you should know in order to get a solid start to investing in 2022!
Contents
Methodology
This article will be utilising the respective sector’s data from Investing.com according to the classifications provided by Bursa Malaysia. The period of reference will be monthly data of the sector’s indexes from Jan 2021 to Dec 2021.
For example, the property sector’s index was 669 points in Jan 2021 and 704 points in Dec 2021. The performance will be measured by dividing Dec 2021 by Jan 2021 index which equates to 5.2%.
Best #1: Industrial Products and Services
That’s right, the industrial products and services sector is the best performing one in 2021. It registered a whopping growth of 19.8%, trending upwards from 169 points in Jan 2021 to 203 points in Dec 2021.
The industrial products and services consists of the following segments:
- Auto Parts
- Building Materials
- Chemicals
- Diversified Industrials
- Industrial Engineering
- Industrial Materials, Components and Equipments
- Industrial Services
- Metals
- Packaging Materials
- Wood Products
Think of it as the manufacturing industry for Malaysia. It has done remarkably well as the industry was able to produce for both the domestic and international markets, with most countries around the world beginning to open up as vaccination increases in 2021.
Notable industrial companies with high market size/capitalisation include
- Chin Hin Group: RM2.2 billion
- Dufu Technology: RM1.9 billion
- UEM Edgenta: RM1.3 billion
- Hextar Global: RM2.2 billion
- Lotte Chemical Titan: RM5.2 billion
Best #2: Technology
Coming in at number 2 of the best performing sector is technology. It registered an impressive growth of 17.9% in 2021, growing from 82 points in Jan 2021 to 97 points in Dec 2021.
The technology sector consists of digital services, semiconductors, software, and technology equipment.
You might not know about this, but Malaysia’s semiconductor industry is among the top 10 in the world, encompassing about 7% of the global semiconductor trade in back-end assembly tests and packaging. In 2021 during the height of the pandemic, companies continued to embark on digitilisation initiatives to adapt to the changing landscape of businesses being done online. This benefited companies who offered digital services, software, and technology equipment.
Notable technology companies with high market size/capitilisation include:
- CTOS Digital: RM3.7 billion
- Hong Sengs: RM7.0 billion
- GHL Systems: RM2.0 billion
- MYEG: RM6.9 billion
- Inari Amerton: RM12.0 billion
Best #3: Transportation and Logistics
This should come as no surprise to you. The Transportation and Logistics sector came in at number 3, registering a growth of 15.6%, going from 745 points in Jan 2021 to 861 points in Dec 2021.
The sector consists of transportation and logistics services and transportation equipment.
The sector became ever more important during the pandemic as consumers needed most of their bought products to be transported to their houses. Online shopping or e-commerce became more important to many of you with delivery services reaping huge profits and margins due to high demand. Because of this, companies that sold transportation equipment also benefited as demand increased in line with higher demand for transportation and logistics services.
Notable transportation and logistics companies with high market size/capitilisation include:
- MISC: RM31.1 billion
- Malaysia Airports: RM9.6 billion
- Westports: RM13.4 billion
- GDEX: RM1.6 billion
- Bintulu Ports: RM2.2 billion
Best #4: Financial Services
This is probably the most surprising sector to be on the best-performing list. The financial services sector comes in at number 4, registering a growth f 7.6% in 2021, trending upwards from 14,464 points in Jan 2021 to 15,566 points in Dec 2021.
The sector consists of banking, insurance, and other financial companies.
Basically, 2021 was a rebound year for the economy but interest rates were still very low. If you are wondering, low interest rates are generally considered bad for banks as they get less money on your loans. It seems like they did just fine in 2021, which makes sense if more and more people and companies borrowed more on the back of a strong economy.
Notable financial services companies with high market size/capitilisation include:
- Maybank: RM98.6 billion
- Public Bank: RM81.7 billion
- RHB Bank: RM23.0 billion
- Hong Leong: RM42.1 billion
- CIMB Group: RM53.7 billion
Worst #1: Healthcare
How the mighty has fallen. The healthcare sector came in as the worst performing sector in 2021, registering a decline of 35.1% from 3,598 points in Jan 2021 to 2,336 points in Dec 2021. The healthcare sector consists of healthcare equipment and services, healthcare providers, and pharmaceuticals companies.
This can be attributable mainly to the steep decline experienced by companies in Malaysia that sell gloves, where they were heavily speculated in 2020 and went up to dizzying heights. When vaccination increased for Malaysia, the threat of Covid-19 decreased, reducing the need for gloves. Companies that provided healthcare services also experienced decreasing businesses when the need for hospitalisation decreased as vaccinations helped reduce the severity of symptoms.
Notable healthcare companies with high market size/capitilisation include:
- IHH Healthcare: RM56.1 billion
- Top Glove: RM17.1 billion
- Supermax: RM3.3 billion
- Hartalega: RM19.2 billion
- KPJ Healthcare: RM4.6 billion
Worst #2: Energy
Coming in at the second worst performing sector in Malaysia is energy. It registered a decline of 11.3% in 2021, trending downwards from 793 points in Jan 2021 to 704 points in Dec 2021.
The sector consists of energy infrastructure, oil and gas, and other energy resources companies.
Despite oil prices improving from $42/barrel in 2020 to $71/barrel in 2021, the energy sector in Malaysia didn’t seem to have benefited from the increased selling prices of oil. This could be due to the fact that the mining sector in Malaysia has actually been on a decline. In 2016, the mining sector’s gross domestic product was still growing at 2.2% but that has declined in 2018 (-2.2%) and 2019 (-0.6%) before the pandemic.
Notable energy companies with high market size/capitilisation include:
- Dialog: RM15.2 billion
- Yinson: RM6.3 billion
- Bumi Armada: RM3.2 billion
- Hibiscus: RM1.9 billion
- Petron: RM1.2 billion
Worst #3: Plantation
The plantation sector comes in at the 3rd worst sector in terms of performance in 2021. It declined by 7.7%, trending downwards from 7,098 points in Jan 2021 to 6,552 points in Dec 2021.
Malaysia’s plantation sector consists mainly of palm oil companies.
Consistent with the energy sector, the plantation sector still decline even though palm oil futures price increased from RM3,935 in Jan 2021 to RM5,159 in Dec 2021. This can be attributable to the ban by Europe on palm oil from Malaysia which affected the sector negatively.
Notable plantation companies with high market size/capitilisation include:
- IOI Corp: RM24.3 billion
- KLK: RM23.5 billion
- Sime Darby: RM26.3 billion
- Genting Plantations: RM5.8 billion
- FGV: RM5.5 billion
Conclusion
There were some sectors in Malaysia that performed well and there were some that didn’t. It’s important to understand the reason behind their performance in 2021, so that you can plan out your investments in 2022.
Let us know in the comments below which sector you are planning to invest in!
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