It has been a strong start to Malaysian equities for the year with the KLCI benchmark index up by 6.75%, outperforming regional peers such as Thailand and Indonesia that posted -1.07% and 0.70%, respectively (Source: Bloomberg, as of 15 March 2024).
This positive momentum is underpinned by incremental improvements in the local macro environment, coupled with a ramp-up in policy implementation. In our latest Fundamental Flash, we delve into the case for Malaysian equities and why opportunities are ripe for investors today.
Crown Jewel in the South
Johor is poised to emerge as the new pivotal growth engine in the south, bolstered by the recent Memorandum of Understanding (MOU) for the Johor-Singapore Special Economic Zone (JS-SEZ) signed between both countries’ leaders early this year. The agreement aims to enhance trade between Malaysia and Singapore, improving the flow of goods and people across borders.
Initiatives such as a passport-free clearance system and the upcoming Rapid Transit System (RTS) Link will further strengthen connectivity between Johor and Singapore, with the RTS Link expected to be operational by January 2027.
With potential parallels to the success of Shenzhen - a special economic zone linked to Hong Kong, Iskandar Malaysia could similarly emerge as a vibrant hub for economic activity. The agreement is expected to be signed during the 11th Malaysia-Singapore Leaders’ Retreat later this year with implementation possibly as early as 2025.
New Pathways to Growth | NIMP & NETR
Other policy frameworks such as the National Energy Transition Roadmap (NETR) is also a game-change for the industry. Approximately RM 637 billion of investment is required to achieve the NETR’s renewable energy (RE) target of 70%.