Malaysian economy set to grow 4%-5% this year
Published on: Wednesday, January 17, 2024
By: Bernama
The US Federal Reserve’s rate cut and potential improvement in Malaysia’s current account will drive the ringgit’s stabilisation in 2024, says Manulife IM.
PETALING JAYA: Malaysia’s economy is expected to grow between 4% and 5% in 2024 and one of the key measures that have been introduced by the government is the economic tie-up between Malaysia and Singapore to set up a special economic zone (SEZ), said Manulife Investment Management (Manulife IM).
Senior portfolio manager, equities Kenglin Tan said the government’s measures to implement reforms and execute fiscal consolidation will further strengthen Malaysia’s macroeconomic foundation.
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“The government is also trying to attract a lot of foreign direct investment (FDI) by being business-friendly and investor-friendly.
“The recent exemption of capital gains tax (CGT) on unit trust is another sign that the government is capital markets friendly,” she said at the Manulife IM 2024 investment outlook media briefing today.
Recently, second finance minister Amir Hamzah Azizan announced that the exemption in foreign-sourced income (FSI) taxes is effective from Jan 1, 2024, until Dec 31, 2026, while the exemption on CGT takes effect from Jan 1, 2024, until Dec 31, 2028.
In addition, she said the implementation of targeted subsidies or social assistance has shown that Malaysia is committed to strengthening its biggest fiscal position and fostering economic growth.
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“The Malaysian equity market has a strong start year to date and we are already seeing activities in the construction and real estate sector. Hopefully, as this continues and activities pick up, it should bode well for the economy as a whole.
“Also, we have a lot of undervalued stocks in the equity market and from there on, it should then spread to other sectors like the financial sector as well as the industrial sector,” Tan said.
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Meanwhile, chief investment officer, Asia (ex-Japan) fixed income Murray Collis said Manulife IM does see the potential for the ringgit to stabilise in 2024.
“This is driven by two factors. Firstly, the US Federal Reserve moved into a rate cut and secondly, we do expect to see some improvement, particularly in the Malaysian current account.
“In 2023, the current account surplus was negatively impacted by lower commodity exports but it can pose some improvements this year from a projected increase in tourism and the Malaysian government announcement of visa-free access for China and India travellers,” he said.
Collis said Manulife IM is more neutral on the Malaysian bond market as it is not as relatively attractive compared to some of the higher-yielding markets in the region.
“But it will be similar to other markets by seeing the direction set from the global markets this year.
“Importantly, the Malaysian government bond yield is just below the US Treasury, if we look at the 10-year rate, is about 3.8%,” he said.
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