Maybank Investment Bank's Top Mid-Small Cap Buys for 2024

2024 should be a better year for Malaysia on several fronts. It will be a year of execution of the macro blueprints launched in 2023, as well as a year of delivery especially in fiscal reforms, to bring the country’s balance sheet back on stronger footing. Hard work and staying-the-course are thus pivotal in Malaysia’s economic transformation, to eventually drive and support the longer-term sustainability agenda.

On the macroeconomic front, we expect slower global growth in 2024 as US economy ‘soft lands’ and China’s growth slows. However, we see green shoots sprouting in ASEAN’s exports and manufacturing, brightening their growth outlook. For Malaysia, we forecast GDP growth to be firmer (2024E: +4.4%; 2023E: +3.9%), underpinned by resilient consumer spending, sustained private and infrastructure investment momentum, plus recoveries in trade-related services and manufacturing industries, namely tourism and electronics.

We expect a slight inflation uptick in 2024 amid gradual adjustments in subsidy rationalisation measures to mitigate the impact on inflation. Consequently, we expect BNM to maintain the OPR in 2024, despite the outlook of interest rate cuts in major advanced economies and regional peers. This is expected to be positive for the Ringgit vs. USD.

For equities, the tail-end of global monetary policy tightening is a tailwind, while stable domestic interest rate policy outlook, economic transformation via the NETR and NIMP2023, and rising FDI momentum are the key catalysts. We also look forward to better corporate earnings growth in 2024. We maintain our YE 2024 KLCI target of 1,610. For investment strategy, we recommend a portfolio of selective trade-related, and domestic sectors, balanced with yield and ESG stocks
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