In its economic and strategy report today, the research house highlighted some potential beneficiaries and losers from the economic initiative.
Some of the potential beneficiaries are sectors relating to discretionary spending, construction, Bursa Malaysia, healthcare, property and tourism.
However, the implementation of the tiered foreign worker levy could negatively impact construction, electronic manufacturing services (EMS), gloves and plantation counters, said analysts Jeremy Goh, Felica Ling and Nurul Athira Salith.
Prime Minister Anwar Ibrahim launched yesterday his vision of a new “Madani economy” aimed at restoring Malaysia as an economic leader in the Southeast Asian region.
The ambitious plan aims to achieve seven key targets within 10 years, including bringing down the fiscal deficit to 3% or lower, having Malaysia ranked among the 30 biggest economies, and be within the top 12 in the Global Competitiveness Index.
Discretionary spending, aviation, brewery and retail counters could potentially benefit from the government’s cash handouts, specifically names like MR DIY Group (M) Bhd (for low ticket items) and Aeon Co (M) Bhd (for mass market target).
On the infrastructure front, infrastructure jobs such as the expansion of Subang and Penang airports, Johor Bus Rapid Transit, Penang Light Rail Transit, Mass Rapid Transit 3 (MRT3), clean water supply in Kelantan and Sabah worth some RM800 million, and other flood mitigation projects worth as much as RM11 billion should sustain job flows for contractors.
“However, we reckon these projects are already anticipated by the market,” the analysts said.
Stock market initiatives
As for the stock exchange, Anwar has proposed that the trade lot size will be reduced and trading of fractional shares will be implemented to increase “investment affordability”. This is in addition to the stamp duty cut which took effect this month.
HLIB Research reckons these measures will help rejuvenate retail participation (year-to-date retail average daily volume (ADV) is RM545 million; 2022: RM547 million) although it is unlikely to return to the heydays seen during the pandemic (2020/2021: RM1.58 billion/RM1.32 billion).
“Bursa would be a direct winner from a revival in ADV,” they said.
The government has also reiterated its commitment to raise the public healthcare budget to 5% of gross domestic product (GDP).
HLIB Research said this signifies much room to grow and will broadly benefit healthcare stocks such as exclusive concession holder Pharmaniaga Bhd, medical equipment procurement and upgrading provider UMedic Group Bhd, and UEM Edgenta Bhd via its subsidiary company, Edgenta Mediserve Sdn Bhd, IHH Healthcare Bhd and KPJ Healthcare Bhd.
As immigration procedures will be simplified which includes the entrance of tourist via visa-on-arrival, HLIB Research said this should further spur post-pandemic tourist arrivals.
This will be positive for the aviation sector, brewers, hotels and real-estate investment trusts (with regional malls and hotels), they added.
HLIB Research has maintained its 2023 GDP forecast at +4.5%, and the KLCI at 1,530 points.
“We maintain our end-2023 KLCI target, and although the third quarter of 2023 is off to a good start gaining (KLCI +5.3%, MTD-July), some pullback could emerge as we enter the results season this August.
“Nevertheless, we anticipate the market’s uptrend to further resume heading towards the fourth quarter as events such as the state elections and the US Federal Reserve’s rate upcycle comes to an end,” the analysts concluded.