KUALA LUMPUR: HLIB research anticipates a positive shift in Malaysia's gross domestic product (GDP) next year, projecting a normalisation to 4.8 per cent in 2024, a rise from this year's estimate of 3.8 per cent.
In a note today, HLIB Research said growth will be supported by a stable labour market, resurgence in the electrical and electronics sector, ongoing recovery in tourism, and the implementation of approved investments aligned with the government's strategic Madani Economy plan.
"Our forecast sits on the upper end of the government's official target of 4.0 to 5.0 per cent year-on-year (YoY), while matching the point estimate of 4.8 per cent YoY."
"Growth is also expected to benefit from a gradual recovery in trade activity as global inflationary pressures continue to cool and major central banks close in on the end of their rate hiking cycles," it said.
HLIB research thinks after almost two years of hikes, the US Federal Reserve has finally reached its peak.
"A pivot next year (we're betting mid-2024) should help risk appetite to resurface for emerging markets – including Malaysia which has near record low foreign shareholding – while also aiding in ringgit's recovery," it said.
Additionally, the research firm expects that advancements in multi-year infrastructure projects, along with initiatives outlined in national master plans and Budget 2024, will stimulate the investment environment.
"The Malaysian economy may also benefit from China's recovery as their government support measures begin to stabilise the economy," HLIB Research added.
HLIB Research foresees a marginal rise in 2024's year-on-year inflation to 2.6 per cent, citing potential upward movement based on subsidy reforms likely to be implemented in the second half of the year.The OPR is expected to be kept steady at three per cent into 2024.
"We highlight three key themes that we expect to be on investor's radar for 2024. These are continued robust recovery in tourists to Malaysia (positive for aviation, brewers, Genting group and selected mall based real estate investment trusts (REITs)), energy transition under National Energy Transition Roadmap (NETR) – with plays on renewable energy energy, procurement, construction and commissioning (EPCC) contractors, utilities and SMRT, and reinvigoration of developments in Johor – in this regard, we favour selected contractors and developers (both Sunway Bhd and Sunway Group Construction Bhd fit the bill), as well as Itmax System Bhd.
Overall, HLIB research has a modest upside bias view to the market with our 2024 KLCI target at 1,550.