Govt’s economic reform measures to strengthen macroeconomic foundation — Manulife IM
KUALA LUMPUR: The government’s measures to implement reforms and execute fiscal consolidation will further strengthen Malaysia’s macroeconomic foundation, said Manulife Investment Management (Manulife IM).
Senior portfolio manager, equities Kenglin Tan said while Malaysia’s economy is expected to grow between 4.0 and 5.0 per cent in 2024, 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).
“The government is also trying to attract a lot of foreign direct investment (FDI) by being business-friendly and investorfriendly.
“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 yesterday.
Previously, Finance Minister II Datuk Seri Amir Hamzah Azizan had said that the exemption in foreign-sourced income tax is effective from January 1, 2024, until December 31, 2026, while the exemption on CGT takes effect from January 1, 2024, until December 31, 2028.
In addition, the implementation of targeted subsidies or social assistance has shown that Malaysia is resolved to strengthen its biggest fiscal position and drive economic growth at the same time.
“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.
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 United States 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 years about 3.8 per cent,” he said.