KUALA LUMPUR: Maybank Investment Bank Bhd (Maybank IB) is cautiously optimistic about the prospect of Malaysia’s economy and equities for 2024, driven by growth, fiscal reforms and economic restructuring.
The bank said the stable political outlook and delivery of macro blueprint cum targets introduced in 2023 would also boost the country’s economic growth.
“2024 will be a year of takeoff in terms of execution of the blueprints announced in 2023 for the ‘transition’ of the economy via reforms and restructuring.
“Growth, fiscal reforms and economic restructuring are thus the three key deliverables by the government in 2024, in our view,” it said in a note today.
Additionally, the bank’s research said an extended runway in terms of public funding and support for major infrastructure projects under the new Public Finance and Fiscal Responsibility Act would catalyse both public and private investments, thus creating a multiplier impact.
Fiscal reforms, in particular, the implementation of targeted subsidy rollback and the upcoming Government Procurement Act (to be tabled in Parliament in the second quarter of 2024), would support fiscal consolidation, providing strength for the ringgit too, it said.
For equities, it opined that the tail-end of US monetary policy tightening was a tailwind while stable domestic policies, economic transformation via the National Energy Transition Roadmap, and rising foreign direct investment momentum with targets to raise product and economic complexity under the New Industrial Master Plan 2030 would be the three key catalysts for positive growth.
“We also look forward to better corporate earnings growth in 2024 as estimated 2023 (2023E) earnings growth was very much impacted by two sectors, namely petrochemicals and plantation.
“Excluding these two sectors, our core earnings growth was a good 15.4% in 2023E. On expectations for stability in commodity prices ahead, we are positive for our 15.6% earnings growth projection for 2024.
“Key risks in 2024 are mainly external, including the ‘higher-for-longer’ US interest rates, US-China geopolitical rivalry, broadening of Israel-Hamas war impacting global demand and trade recovery, and China’s real estate sector flaring up and souring financial and capital market sentiment,” it said. – Bernama