[MALAYSIA] Bursa Malaysia is set to continue its upward trajectory in 2025, buoyed by a resilient domestic economy, robust investor participation, and strategic initiatives aimed at enhancing market liquidity and sustainability.
Strong Economic Foundations Support Market Growth
Malaysia's economy is projected to expand between 4.5% and 5.5% in 2025, driven by strong domestic demand, a rebound in exports, and a resurgence in tourism. The government's fiscal measures, including targeted subsidies and a commitment to reducing the fiscal deficit to 3% of GDP in the medium term, provide a stable macroeconomic environment conducive to market growth.
The Finance Ministry's economic outlook projects GDP growth of between 4.5% and 5.5% in 2025, following a 5.1% growth in the first half of 2024 (1H24), thanks to strong domestic demand, rising exports, and a tourism rebound.
Additionally, Bank Negara Malaysia (BNM) has maintained a stable Overnight Policy Rate (OPR) at 3.00%, which has helped support consumer spending and business investment. Analysts believe that the central bank's monetary stance strikes a careful balance between supporting growth and managing inflation, which remained within the 2% to 3% target range throughout 2024. Stable interest rates are expected to provide a favorable environment for both equity and fixed income markets in the near term.
Meanwhile, the country’s industrial and technology sectors are showing signs of a sustained recovery, driven in part by government incentives aimed at accelerating digital transformation. The RM1.5 billion Digital Economy Fund introduced in late 2024 has started yielding results, particularly in the small and mid-cap segments, where tech-driven companies have recorded double-digit revenue growth. This resurgence has translated into stronger listings and trading activity on Bursa Malaysia’s ACE Market, further diversifying the exchange’s portfolio.
Bursa Malaysia's Performance in 2024
In 2024, Bursa Malaysia's benchmark index, the FTSE Bursa Malaysia KLCI, gained 15%, marking its strongest annual performance in over a decade. The exchange's market capitalization surpassed RM2 trillion, reflecting increased investor confidence and participation. Foreign investors contributed 35% to the trading value, with a net inflow of RM3.99 billion.
The exchange's net profit for the year rose by 22.9% to RM310.12 million, supported by a 64% increase in average daily trading value. This performance underscores Bursa Malaysia's resilience amid global economic uncertainties.
The energy and plantation sectors were standout performers in 2024, benefiting from favorable commodity prices and increased global demand. Crude palm oil (CPO) prices averaged RM4,000 per tonne, boosting earnings for listed plantation giants, while a global energy crunch in the first half of the year lifted upstream oil and gas counters. These sectoral gains were key contributors to the KLCI’s overall growth, drawing renewed interest from institutional and retail investors alike.
Strategic Initiatives for 2025
Looking ahead, Bursa Malaysia is implementing several strategic initiatives to sustain its growth momentum:
Enhancing Market Liquidity: Efforts are underway to increase the free float of shares, particularly in large-cap stocks, to attract more foreign investment.
Sustainability Initiatives: The introduction of mandatory sustainability ratings for companies listed on the Main Market aims to promote environmental, social, and governance (ESG) practices and attract sustainable investments.
Regional Collaboration: Bursa Malaysia is strengthening its position as a regional financial hub by collaborating with ASEAN exchanges to enhance cross-border capital market activities.
Bursa Malaysia has also ramped up its digital infrastructure initiatives, including the full implementation of its Centralised Sustainability Intelligence Platform (CSIP) scheduled for mid-2025. This platform will provide real-time ESG data and analytics to investors and regulators, improving transparency and decision-making. It marks a critical step toward aligning the exchange with global sustainable finance standards and is expected to increase Malaysia’s appeal to ESG-focused funds.
Outlook for 2025
Analysts remain cautiously optimistic about Bursa Malaysia's prospects in 2025. While external factors such as global trade tensions and interest rate policies may pose challenges, the exchange's strategic initiatives and strong economic fundamentals provide a solid foundation for continued growth. The government's commitment to fiscal discipline and sustainable development further supports the positive outlook for the Malaysian stock market.
As Malaysia navigates the complexities of the global economic landscape, Bursa Malaysia's proactive approach and strategic initiatives position it well for sustained growth and development in 2025 and beyond.
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