On October 13, 2024, at 4 PM, Malaysia's Prime Minister, Anwar, announced the fiscal budget for the year 2024. Prime Minister Anwar mentioned three main strategies to build a prosperous nation: (1) Adjust economic structure and promote economic growth; (2) Improve people’s living standards; and (3) Improve government good governance.
Source: Ministry of Finance
The projected revenue for this year has increased from RM 303.2 billion in 2023 to RM 307.6 billion, and the allocation for this year has also risen from last year's RM 386.1 billion to a high of RM 393.8 billion, making this budget the largest in Malaysian history. Therefore, the expected fiscal deficit for this year is estimated to reach RM 86 billion. However, the fiscal deficit for 2024 is expected to decrease to 4.3% of the Gross Domestic Product (GDP).
To influence the economic activities of the country, there are typically two primary tools. The first is monetary policy, where the central bank adjusts interest rates to impact the liquidity of currency in the market and consequently alter people's attitudes towards consumption. The other is fiscal policy, where the government allocates funds to various projects through policies, thereby increasing the liquidity of money in the market and stimulating economic activities. As investors, it's important for us to pay attention to the aspects of these policies that may have positive or negative impacts on companies, guiding our observation and investment decisions.
Consumer
Impact: Positive
Company: Consumer Sectors, LHI, TEOSENG, QL, LAYHONG
Highlight:
Impact: Negative
Company: TOMEI, POHKONG, FFB, DLADY, F&N, NESTLE
Highlight:
Utilities
Impact: Positive
Company: TENAGA
Highlight: The government's continued provision of electricity subsidies to impoverished households will benefit electricity companies.
Tourism & Entertainment
Impact: Positive
Company: CAPITALA, GENM, GENTING, SHANG, BERJAYA, AAX, AIRPORT, ASTRO
Highlight:
Housing
Impact: Positive
Company:
Highlight:
Healthcare
Impact: Positive
Company: UMC
Highlight: The government's allocation for the purchase of medical equipment will boost the sales of medical equipment distributors.
Infrastructure / Public projects
Impact: Positive
Company: Infrastructure Related Sectors (raw material suppliers, contractors, construction, and others).
Highlight: The government's restart or implementation of large-scale projects such as the Sabah Pan Borneo Project (Phase 1B), the Sarawak-Sabah Link Road Project (Phase 2), the expansion of the North-South Highway (PLUS) to 6 lanes, the LRT3 project, and the resolution of water supply issues will require the participation of infrastructure-related companies.
Electric Vehicle
Impact: Positive
Company: SUNWAY, MRCB, GAMUDA, PENTA, GENETEC
Highlight:
Solar Energy
Impact: Positive
Company: SUNWAY, MRCB, GAMUDA, SLVEST, SUNVIEW, TNB
Highlight: Build a transmission line network in Sabah to support solar power generation and transform Putrajaya into a low-carbon city, while promoting the installation of solar panels. This will benefit construction companies and businesses in the solar industry.
Others
Impact: Positive
Company: IFAMSC, ADB, CENSOF, CUSCAPI
Highlight:
Impact: Positive
Company: CEB, INARI, NATGATE, MPI, UNISEM, PENTA, VITROX
Highlight:
From this year's budget, we can see that the government has abandoned short-term welfare measures. They have ceased giving money to the people to boost consumption and allowing withdrawals from the Employees Provident Fund (KWSP) accounts. Instead, they are focusing on longer-term development, such as:
It can be said that this budget lacks some short-term surprises and may not be well-received by the market in the short term. However, taking a long-term perspective, if everything can be executed according to plan, it will be beneficial for Malaysia's future economy.
MQ Trader has also identified potential beneficiary companies of certain policies. Since this budget only provides a broad blueprint, many details, such as the execution of policies and any conditions, remain unknown. We will need to wait for further announcements over time. As investors, what we can do is prepare in advance, identify companies with the potential for significant benefits, gradually position ourselves, and then reap the rewards at some point in the future.
[Disclaimer: This message is for information purposes only and is not intended to be distributed to any third party. It does not construe as an offer/a solicitation/a recommendation to buy/sell any stocks. Please consult your own independent adviser(s) before investing in any stocks and no responsibility or liability can be accepted for any loss or damage that may arise from the reliance of this message. The information herein constitutes our findings as of this date and is subject to change without notice.]
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Created by MQTrader Jesse | Oct 26, 2023
Created by MQTrader Jesse | Oct 12, 2023