Happy New Year! And welcome to your review of the Malaysian stock market for 2023!

Woooo, which sectors performed the best in 2023? And which ones were brought back down to earth?

There is a lot to go through for the year. This article will help you determine which sectors did well and which ones didn’t in 2023. For you, sectors that performed well could indicate strong fundamentals. Sectors that didn’t could indicate hidden opportunities.

Methodology

We will look at the sectors classified by Bursa Malaysia here, and compute the returns of the indexes from 31 December 2022 to 31 December 2023. Based on these returns, we will then rank the top 4 and bottom 3 performers for the year.

The sectors that we will be looking at include:

  • Construction
  • Consumer Products & Services
  • Energy
  • Finance Services
  • Health Care
  • Industrial Products & Services
  • Plantation
  • Property
  • Technology
  • Telecommunications & Media
  • Transportation & Logistics
  • Utilities

Top #1: Utilities

The utilities sector ranks number 1 as the top performer for 2023. It consists of water, gas, and electricity companies and gained about 51.4%. The sector consists of water, electricity, and gas companies such as:

  1. Electricity: Tenaga Nasional, YTL, Ranhill, Eden, Mega First
  2. Water: PBA Holdings, Salcon Engineering
  3. Gas: Gas Malaysia, Petronas Gas

For 2023, the electricity companies such as YTL, Ranhill and Tenaga Nasional drove the sector upward. YTL Corporation’s revenue grew by a whopping 22% for the financial year of 2023 (June 2022 to June 2023). Meanwhile, Ranhill’s revenue also grew impressively by 34% from January 2023 to September 2023. Tenaga Nasional, which is the biggest electricity producer also saw a solid year.

Generally, electricity companies experienced lower raw material costs in 2023, which improved their revenue and profits. Crude oil prices declined from US$85.9 in December 2022 to US$77.0 in December 2023, while coal prices decreased from US$404 to US$146 over the same period.

Top #2: Property

Coming in at number 2, the property sector saw a resurgence. It rose by 34.5% for the year as interest in properties recovered among homebuyers after the pandemic.

According to data from NAPIC, the total value of property transactions increased by 1.1% to RM85.4 billion in the first half of 2023 from RM84.4 billion in the second half of 2022.

Most notably, some large property developers’ share prices have gone up sharply. UEM Sunrise announced that it exceeded its launch and sales target for 2023, while Iskandar Waterfront announced its plans to restructure and reorganise its company for the better.

Top #3: Construction

The construction sector (not to be mistaken with the property sector) comes in at number 3. It gained by 25.8% for 2023 due to the commitment by the government to continue investing in large infrastructure projects such as:

  1. MRT3: MRT2 has just been completed in 2023. The government has said that it will start to buy land for MRT3 in 2024.
  2. Penang LRT: MRT Corp is currently finishing studies on the project by early 2024.
  3. Pan Borneo: The highway project in Sarawak is nearing completion, while Sabah’s portion is expected to be completed by the end of 2024.

Notably, WCE Holdings’ share price gain has been high for 2023. Its revenue from the West Coast Expressway has almost doubled for 3Q 2023 and is targeting to complete 3 more sections by March 2024. Meanwhile, Ekovest also gained as its DUKE 3 highway was successfully launched in November 2023.

Top #4: Healthcare

The healthcare sector comes in at number 4, gaining by 9.3% for the year. However, there is a caveat. The sector was driven mostly by the four horsemen of glove stocks – Top Glove, Kossan, Hartalega, Supermax.

2022 was a disaster for glove stocks. Malaysia came out from the pandemic. People were vaccinated and they weren’t that worried about Covid-19 anymore. Glove stocks interest went down a lot, and so did their share prices.

Hence, 2023 saw a recovery in the gloves sector. With the resurgence of Covid-19 at the end of the year, some investors came back in fear of a further spike in infections.

Bottom #1: Consumer Products

Perhaps the most surprising of the bottom performers in 2023 is the consumer sector. It performed the worst, losing 5.6% for 2023. This is tied directly to how the Malaysian economy performed. Economic growth came down to an average of 3.9% in 2023 (1Q to 3Q) from 8.7% in 2022.

The context is that 2022 was a rebound year. Everyone had pent-up desires to buy things. But that couldn’t continue forever. Hence, Malaysian appetite change led to a slower growth in this sector.

Senheng’s revenue declined from RM354 million in 3Q 2022 to RM313 million in 3Q 2023 as Malaysians cooled down on buying electronic products. Meanwhile, Berjaya Food (best known for its Starbucks franchised brand) also suffered a drop in its profits for 2023.

Bottom #2: Industrial Products

The industrial sector is the second-worst performer of the year, losing 4.8%. This was due to two things mainly:

One, central banks around the world were raising interest rates. When interest rates are higher, businesses invest less as it is expensive to borrow.

Two, the U.S. and China are fighting again and relations are messy, and that is not good for global and Malaysian companies who exports to both countries.

Shin Yang, which is an industrial, plantation and logistics company, saw its revenue for the quarter ended September 2023 decline by 9.4%. Meanwhile, Uwc Berhad (makes metal fabrication products) had a rough quarter as of October 2023. Revenue dropped by almost half to RM45.5 million from RM98.1 million a year before.

Conclusion

2023 is a wrap, and you need to know the facts. Take what happened to these sectors as a base to inform your investment decisions for 2024. Always remember to do your research thoroughly, and don’t let your emotions get the better of you!

 

Let us know in the comments below what your investment goals for 2024 are!

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