KUALA LUMPUR: Malaysia's stock exchange may scale greater heights this year after ending 2024 with its best annual performance since 2010.
The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI), according to some analysts, may edge closer to a whopping 1,940 points this year, which will exceed the all-time high of 1,870.37 set in April 2018.
This follows a 13 per cent gain in 2024 - the index's first gain in four years - to settle at 1,642.33 points after starting the year at 1,453.10.
Analysts said the strong showing throughout the year highlighted investor confidence and the resilience of the local economy, positioning Bursa Malaysia as a notable performer in the global financial landscape.
The key index closed lower on the first trading day of 2025, pressured by negative sentiment from Wall Street and weaker economic data from China.
It dropped 9.46 points or 0.58 per cent to 1,632.87 compared with Tuesday's close of 1,642.33.
SECTORAL PERFORMANCE
FBM KLCI's gains in 2024 were largely driven by strong performances in the construction sector, which surged 60.71 per cent, followed by utilities (38.25 per cent) and properties (31.51 per cent).
Among the top gainers in the construction sector was heavyweight Gamuda Bhd, whose share price skyrocketed by 106.54 per cent over the year. Its share price closed at RM4.74 for a market capitalisation of RM27 billion.
Gamuda was included in the FBM KLCI following the semi-annual review of the FTSE Bursa Malaysia Index Series in December.
Utilities sector was buoyed by YTL Power International Bhd which saw a significant surge of 73.33 per cent, closing at RM4.42 and valuing the company at RM36.29 billion.
Meanwhile, IOI Properties Group Bhd drove growth in the property sector, rising by 28 per cent during the year to hit a market capitalisation of RM12.33 billion.
In contrast, the telecommunications and media sector saw a fall of 4.44 per cent, dragged by heavyweights CelcomDigi Bhd and Maxis Bhd which dropped 11.06 per cent and 4.95 per cent respectively.
CelcomDigi ended 2024 at RM3.62, valuing it at RM42.47 billion while Maxis down to RM3.65 for a market cap of RM28.59 billion.
The consumer products and services sector slipped 0.76 per cent with Nestle (M) Bhd's share price falling by 14.98 per cent last year.
The stock closed at RM99.98 on Tuesday, bringing its market cap to RM23.45 billion.
The energy sector also faced challenges, experiencing a modest increase of just 0.64 per cent.Its heavyweight Dialog Group Bhd dropped 11.06 per cent to close at RM1.85, which valued the company at RM10.44 billion.
2025 OUTLOOK
CGS International Research has set its end-2025 FBM KLCI target at 1,940, based on the assumption that the 12-month forward price-to-earnings (P/E) will expand from the current 13.4 times to 15.4 times.
It noted that while Malaysian share prices had bottomed in June 2023, the rally has so far been primarily driven by corporate earnings.
Going forward, the firm said the compelling reasons to expect a meaningful expansion in forward earnings multiples in 2025 include a progressive policy backdrop, robust domestic demand, a major currency trend reversal and double-digit earnings growth for the second year in a row.
On a sector basis, the firm downgraded the healthcare sector to a "Neutral" outlook for 2025, citing slowing growth despite strong performances in 2024.
However, it remains optimistic about domestic-driven sectors, including construction, utilities, telecommunications, automotive, banking, consumer discretionary, and upstream plantations.
"Despite underperformance year-to-date (YTD), we cut technology from 'Neutral' to 'Underweight' as lofty analyst estimates continue to not be met. There is also potential volatility from president-elect Donald Trump and ringgit appreciation to contend with.
"Energy is split between oil services and petrochemicals, continuing to be bullish on the former as shares have unduly corrected despite good earnings delivery.
"Despite the upside from US tariff changes on Chinese imports, we remain 'Underweight' on gloves as we cannot reconcile forward multiples, even with a bullish recovery scenario. It is worth noting that consensus downgrades for the sector have been among the highest this year," CGS International said.
Meanwhile, MIDF Research has set its baseline target for the FBM KLCI at 1,800 points for 2025, in light of positive monetary (liquidity) and fundamental prospects.
The firm noted that along with the baseline expectation of resilient macro performance, market consensus is forecasting the FBM KLCI to register a healthy nine per cent year-on-year (YoY) earnings growth in 2025.
"Moreover, the expectation of further rate cuts by major central banks, together with additional stimulus by China authorities should be overall positive to the world's financial liquidity situation.
"Nonetheless, we continue to be mindful of potential externally driven downside risks to the 2025 outlook. Despite our baseline expectations next year of healthy earnings growth and an easing liquidity environment, we expect equity valuation to remain relatively stagnant," it said.
MIDF Research said the banking sector is expected to experience zero stress in the near future, the construction sector is heading towards optimum levels, while the consumer sector is set to thrive in 2025.
Healthcare providers are expected to have strong fundamentals despite facing cost pressures.
The oil and gas sectors, specifically upstream and midstream, remain sanguine amid volatile oil and gas prices.
The plantation sector is experiencing a renewed catalyst for growth.
The property sector is expected to see healthy demand, and the outlook for real estate investment trusts (Reits) is positive, with organic growth anticipated.
The automotive sector is navigating a fluid outlook, while the gloves sector is witnessing a more favourable demand-supply dynamic.
The utilities sector could have a bumper year, especially in the solar engineering, procurement, construction, and commissioning segment.
The technology sector is awaiting the next wave of growth, the telecommunications sector is providing support for the development of 5G, and the transportation sector is progressing, despite facing various hurdles.
KSI Strategic Institute for Asia Pacific expects FBM KLCI to range between 1,650 and 1,750 points this year, buoyed by a steady domestic economic recovery.
The outlook is driven by stable commodity prices, especially oil, growth in the technology and financial sectors, and favourable government policies.
Strong corporate earnings, a rising ringgit, and increased foreign investment are also expected to support the index.
KSI also noted that key factors driving market and stock performance are expected to include positive consumer spending, driven by higher wages, and accelerated infrastructure development.
Additionally, structural reforms aimed at fiscal sustainability, along with state government economic initiatives, are anticipated to play a significant role.