As we set foot into 2015, it is a good time for us to review what has happened in the past 12 months for the Malaysia stock market. Who are the winners and losers?
What Happened In 2014?
Following a firm run in 2013 where 10.5 percent in returns was clocked, the Malaysia stock market ended 2014, specifically the last few months of the year, on a disappointing note. The second half saw 121 points (6.5 percent) shaved off the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI), wiping out gains made earlier in the year.
The market, however, started 2014 strongly as it continued its 2013 momentum. During the first seven months of 2014, the FBM KLCI went on a record-breaking streak. Boosted by local fund buying of banks and plantations firms, the local benchmark reached an all-time high of 1,896.23 on 8 July.
Indices Performances
Source: FactSet
Things then took a turn when geopolitical risks in Ukraine and the Middle East escalated. Investors also reacted with caution when the MH17 crash came to light in mid-July. The market eventually lost steam as sentiment was further hit by the double whammy of declining crude oil prices and foreign fund outflow. The FBM KLCI closed 2014 at 1,761.25, down 5.7 percent for the year. The performance put Malaysia a laggard among its global peers.
For Your Info
Crude oil prices – Falling oil prices will affect government revenue as it is estimated to make up 30 percent of total revenue. While that proportion has been declining, it still makes up a considerable portion. Even with the abolishment of fuel subsidies late last year, the savings from fuel subsidies will be offset by the fall in oil-related revenues.
Flow of foreign fund – According to MIDF Equities Research, foreign investors remained net sellers of Malaysian stocks in 2014. The net outflow as of 21 November had increased to RM3.9 billion. This is compared to a net inflow of RM3 billion in 2013.
Among the FTSE Bursa Malaysia Index series, smaller capitalisation stocks bucked the trend. The FTSE Bursa Malaysia Fledgling Index that tracks Mainboard-listed companies ranked below the top 98 percent of the Bursa Malaysia Universe in terms of market capitalisation, finished the year 11.1 percent higher. Volatility spiked up to 13.6 percent, the highest reading in the last five years.
The showing was buoyed by sterling performances from travel and leisure, support services and food producers sectors.
FTSE Bursa Malaysia Index Series Performance
Source: FTSE
Bursa Malaysia Sector Indices
The performances of sector indices were mostly in red ink. Seven out of ten sector indices were in the negative territory for the full year. The plantation sector suffered the heaviest blow as oil price retreated.
On the other hand, the technology sector was the outperformer with gains in excess of 10 percent. For the past two years, the sector has stayed ahead on the back of robust smartphone and tablets sales. Measures unveiled at the 2015 Budget also lent a hand as the government pledged funds to strengthen the ICT sector by funding infrastructure expansion and providing support for both research and development.
Industry Indices Performance
Source: FactSet
IPO Market
There were 14 new listings on Bursa Malaysia. This was the lowest count since 2009. According to RHB Investment Bank, total funds raised were nowhere near that of 2013 or 2012 as mega listings of 1Malaysia Development and Iskandar Waterfront Holdings were delayed to 2015.
Of those who made successful debuts, plantation player Tanah Makmur, piling and foundation specialist Econpile Holdings and real estate developer IOI Properties Groupwere the top performing counters. Meanwhile, oil and gas firm Reach Energy and marine vessels operator EA Technique (M) were the only two trading below water.
Performances Of Newly Listed Companies
Source: Bursa Malaysia
Be sure to catch our weekly company analysis of Malaysian corporations.
 This article is brought to you by Bursa Malaysia Berhad. The research in this article was conducted independently by Pioneers & Leaders (Publishers) Pte Ltd (“Pioneers & Leaders”) and the views and opinions expressed in this article are Pioneers & Leaders’ own and do not represent the views and opinions of Bursa Malaysia. Bursa Malaysia does not warrant or represent, expressly or impliedly as to the accuracy, completeness and currency of the information in this article. In no event shall Bursa Malaysia be liable to the reader or any other third party for any claim howsoever arising out of or in relation to this article.
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