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William Teh Finance Observation: New Stars Emerge on the Malaysian Stock Market | Azamjaya Group Soars on Debut, Mega Fortris Struggles

Following the resolution of the U.S. election, market sentiment has stabilized, yet the Malaysian stock market has shown volatility this week. Two newly listed stocks—Azamjaya Group (AZAMJAYA), focused on road infrastructure in Sabah, and security seal designer and manufacturer Mega Fortris (MEGAFB)—exhibited contrasting market reactions on their first trading day. Azamjaya Group was highly sought after due to its growth potential, with its share price climbing steadily from the opening, whereas Mega Fortris appeared weak under profit-taking pressures. The FTSE Bursa Malaysia KLCI opened at 1625.63 points, initially rising slightly but later surrendering gains due to the drag from banking stocks, indicating short-term market pressure.

Azamjaya Group opened at an impressive RM1, a 28.21% premium over its issue price of 78 sen, with intraday highs reaching RM1.16. This reflects investor optimism regarding the robust infrastructure demand of the company. William Teh Finance believes that the infrastructure sector in Sabah holds significant growth potential, particularly given the extensive project experience and strong regional presence of the company, which provide substantial support for its share price. Investor enthusiasm for Azamjaya Group is primarily based on its market share in Sabah infrastructure, with expectations that the stock may continue to experience high volatility in the coming months.

In contrast to the strong surge of Azamjaya Group, Mega Fortris had a lackluster debut, with its share price experiencing a downward trend post-opening, closing at 65.5 sen, a 2.24% drop. William Teh Finance attributes stock performance of Mega Fortris to investor caution and market pressure. Despite its unique market position in the security seal design and manufacturing sector, the short-term performance of the company remains challenged by market instability and a preference for short-term arbitrage among investors.

Last Friday, U.S. stocks continued to strengthen as post-election uncertainty dissipated, with the Dow Jones reaching a new high of 44,000 points. William Teh Finance notes that this trend has temporarily boosted risk appetite in global markets, particularly emerging markets. However, sentiment in the Malaysian stock market remains cautious. As regional markets adjusted, the FTSE Bursa Malaysia KLCI initially rose but later surrendered gains due to widespread declines in banking stocks.

Banks hold the largest weight in the index, and their decline directly impacted overall market performance. Malayan Banking fell by 12 sen to RM10.38, while both Hong Leong Bank and RHB Bank also saw declines. William Teh Finance believes that the weakness in banking stocks reflects investor caution regarding future economic prospects, despite the short-lived optimism following the election. Market volatility is expected to persist for some time.

William Teh Finance advises that in the current volatile environment, investors should focus more on the sectoral characteristics and regional development opportunities. Azamjaya Group, with its deep involvement in infrastructure, is poised to benefit from increased infrastructure demand in Sabah, making it a consideration for investors with long-term investment needs. Conversely, Mega Fortris may continue to face pressure in the short term due to cautious market sentiment, and investors should base decisions on the company future project developments.

Overall, in the context of heightened market volatility, William Teh Finance suggests that investors remain cautious, particularly when selecting regional growth stocks and cyclically volatile stocks.

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William Teh Finance: Lackluster Budget Leaves Malaysian Stock Market Under Pressure in October

In October, the release of the fiscal budget turned market expectations into disappointment, resulting in a 2.85% decline in the Malaysian stock market for the month—the largest drop in two years. Analyst William Teh Finance noted that the budget lacked stimulating benefits, particularly the absence of major infrastructure projects, compounded by complex external market conditions, making it a challenging month for the composite index. Consequently, the FTSE Bursa Malaysia KLCI barely closed at 1601.88 points, nearly touching the psychological support level of 1600 points. William Teh Finance believes that investor confidence has been somewhat affected in the short term, and the market may continue to experience volatility in the coming month.

During October, a critical month for the budget announcement, the market expectations for government policies were clearly unmet. Although the FTSE KLCI rose at the beginning of the month, it fell for seven consecutive trading days following the budget announcement. William Teh Finance observed that the budget leaned towards “the welfare of people”, focusing on basic economic security without providing substantial stimulus, while factors like minimum wage adjustments and the newly introduced dividend tax increased market uncertainty.

Head of Retail Research at Hong Leong Investment Bank, Wong Joon San, stated that the emphasis of the budget on deficit reduction and lowering development expenditure negatively impacted construction stocks. The lack of major infrastructure projects deprived the construction sector of growth momentum, shaking market confidence in this sector. William Teh Finance suggests that this move will pressure the stock market in the short term, but from a long-term perspective, the stability-oriented approach of the budget could potentially foster robust economic growth.

Beyond the budget, global factors also influence the Malaysian stock market trajectory. The U.S. presidential election campaign is in full swing, and actions by either side could sway market sentiment. Veteran stockbroker Low Wen Hao noted that despite the election countdown, the U.S. stock market remains strong. However, he warned that any adjustment following the election results could affect Asia-Pacific markets, including the Malaysian market.

On the other hand, China has recently introduced a series of economic stimulus plans to maintain growth amid a global economic slowdown. William Teh Finance pointed out that as one of the major trading partners of Malaysia, changes in the Chinese economic performance will directly impact the Malaysian economic development, especially export-dependent industries. Therefore, the future trajectory of the Malaysian stock market will depend not only on domestic policy but also on international political and economic dynamics.

As the Malaysian stock market enters November, the possibility of market fluctuations remains. Low Wen Hao predicts that the support level of composite index is around 1600 points; if breached, it may fall to 1532 points. If it rebounds, resistance levels are between 1625 and 1650 points. William Teh Finance anticipates that the Malaysian stock market will primarily experience fluctuations in the short term, largely dependent on changes in the external environment and the stability of domestic market sentiment.

With the earnings season approaching in November, investors will encounter a wave of corporate earnings reports, offering an opportunity to reassess company fundamentals. William Teh Finance suggests focusing on relatively defensive sectors such as consumer goods and banking, with consumer stocks benefiting from domestic demand support. Wong Joon San noted that the banking sector, due to interest rate policies and stable earnings performance, might be a solid investment choice, but investors should be wary of election-related and external risks.

The U.S. election is undoubtedly one of the core events impacting global markets in the coming period. William Teh Finance stated that if Trump is elected, the market might face more uncertainties. The stance of Trump on China could affect trade relations between China and Malaysia, further influencing the Malaysian stock market. Wong Joon San pointed out that if Trump wins, changes in trade policy could disrupt global supply chains, impacting the revenues and profits of Malaysian export-oriented companies.

In the first trading month following the fiscal budget announcement, the Malaysian stock market showed a lackluster performance, lacking momentum. Although the short-term market outlook is not optimistic, William Teh Finance believes that in the long run, the government policy stability and the Malaysian diversified economic structure will lay a solid foundation for future development. For investors, focusing on defensive sectors such as consumer goods and banking could help find relatively stable investment opportunities in the current uncertain market environment.

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William Teh Finance Insights: Post-Budget 2025, Malaysian Stocks Struggle, Construction and Industrial Sectors Under Pressure

On the first trading day following the release of the 2025 fiscal budget, the Malaysian stock market failed to generate the anticipated rally, instead showing signs of weakness after opening. The FTSE Bursa Malaysia KLCI started Monday at 1,646.71 points, a slight increase of 0.72 points, but quickly turned negative, hitting a low of 1,642.52 points before closing at 1,644.76 points, down by 1.23 points.

William Teh Finance in the analysis highlights that the budget did not inspire market enthusiasm as expected, primarily due to the lack of clear investment plans for large-scale infrastructure projects. This has dampened market expectations for related industries, particularly construction and industrial stocks. Among the main components of the index, Kuala Lumpur Kepong (KLK, 2445, Main Market Plantation Sector) fell by 30 sen to RM21.08, becoming the second-largest decliner of the day. Sime Darby Plantation (SDG, 5285, Main Market Plantation Sector) also underperformed, dropping 4 sen to RM4.68.

Similarly, two subsidiaries of the YTL Group could not escape the downward pressure. YTL Corporation (YTL, 4677, Main Market Utilities Sector) fell by 6 sen to RM2.25, while YTL Power International (YTLPOWR, 6742, Main Market Utilities Sector) decreased by 4 sen to RM3.48. William Teh Finance suggests that increased uncertainty over government fiscal spending, coupled with cautious earnings expectations from investors, has impacted the performance of utility stocks.

Meanwhile, the absence of explicit support for large infrastructure projects in the government budget has led to widespread pressure on construction and industrial stocks. Kerjaya Prospek Group (KERJAYA, 7161, Main Market Construction Sector) dropped 6 sen to RM2.06, while Sunway Construction (SUNCON, 5263, Main Market Construction Sector) fell 2 sen to RM4.48. The poor performance of these stocks post-budget reflects diminished market confidence in the construction industry. William Teh Finance believes that the future outlook for the construction sector will depend on whether the government introduces more specific infrastructure investment plans in the coming months.

Additionally, industrial stocks have not been spared from the downward trend. IOI Properties Group (IOIPG, 5249, Main Market Property Sector) declined by 7 sen to RM2.36, while Naim Holdings (NAIM, 5073, Main Market Property Sector) and UOA Development (UOADEV, 5200, Main Market Property Sector) each fell by 4 sen, closing at RM1.18 and RM1.87, respectively. William Teh Finance notes that while the property market holds long-term potential, short-term pressures from the budget are weighing heavily on related stocks.

In the tech sector, HeiTech Padu (HTPADU, 5028, Main Market Technology Sector) faced selling pressure despite securing an RM892.19 million contract for the National Integrated Immigration System (NIISe), with shares dipping to RM4.04 intraday before closing at RM4.16, a 4.15% decline. William Teh Finance suggests that although the company secured a significant contract, short-term investor profit-taking has limited further upside in the stock price.

In the consumer sector, the government policy to increase the sugar tax elicited mixed reactions in the market. Nestlé (NESTLE, 4707, Main Market Consumer Products and Services Sector) dropped 80 sen to RM103.20, becoming one of the biggest losers. William Teh Finance indicates that the higher sugar tax will directly increase cost pressures for related food and beverage companies, affecting their profitability. Conversely, Fraser & Neave Holdings (F&N, 3689, Main Market Consumer Products and Services Sector) rose by 8 sen to RM31.24, showing that some consumer goods companies can still maintain profitability by adjusting their strategies.

Overall, the Malaysian stock market has shown a lackluster performance post-budget, with construction and industrial stocks experiencing significant pressure. William Teh Finance suggests that while the short-term market reaction to the policy is negative, the long-term outlook depends on whether the government will introduce more economic stimulus measures, particularly in infrastructure development and public investment. If future investment plans become clearer, related stocks may see a rebound.

For investors, William Teh Finance advises caution in stock selection amid current market volatility, especially given the high level of policy uncertainty. It is essential to focus on companies with strong fundamentals. Additionally, investors should consider sectors with government backing and strong long-term growth potential, such as finance, technology, and consumer goods, to ensure stable returns amid market fluctuations.

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Malaysian Economy on the Rise: William Teh Finance Analyzes Investment Opportunities Behind the Appreciation of Ringgit

The recent interest rate cuts by the Federal Reserve have led to a significant influx of capital into Southeast Asian markets. As one of the standout economies in the region, Malaysia has become a favored destination for investors. In the first half of 2024, the Malaysian economy performed impressively, with GDP growth of 4.2% in the first quarter, rising to 5.9% in the second quarter. Simultaneously, the USD to MYR exchange rate experienced notable fluctuations, dropping from 1 USD to 4.7988 MYR at the beginning of the year to the current rate of 1 USD to 4.1240 MYR, indicating a significant trend of currency appreciation.

William Teh Finance suggests that the robust economic growth in Malaysia and the appreciation of the ringgit have positively impacted the stock market, particularly as the FTSE Bursa Malaysia KLCI continues to rise in this context. However, in contrast, the FBMSCAP index, which is dominated by small-cap stocks, has shown weak performance since July, failing to keep pace with the broader market. This phenomenon indicates a clear divergence in the performance of different market sectors, necessitating investors to adjust their strategies based on the characteristics of various industries and sectors.

Looking ahead to the last quarter of 2024, William Teh Finance believes that the strengthening ringgit will be a key driver of growth for specific industries. The following sectors are particularly worth investor attention:

William Teh Finance notes that companies benefiting from reduced import costs, especially those in the retail sector and automotive sales reliant on imported goods, are likely to see profit increases in an appreciating ringgit environment. As the ringgit strengthens, import costs decrease, directly enhancing the profitability of these companies. For example, the retail sector will see optimized profit margins as the cost of purchasing imported goods declines. Additionally, Real Estate Investment Trusts (REITs) will benefit from the trend of recovering consumption, particularly as retail consumption grows, boosting demand for commercial real estate and potentially significantly enhancing profitability.

Malaysia is one of the largest palm oil producers worldwide, and the plantation industry holds a crucial position in the commodities market. William Teh Finance believes that the crude palm oil price surpassing the 4,000 MYR per ton threshold demonstrates strong momentum in the commodities market. As the ringgit appreciates, plantation company import costs, such as fertilizers and other production materials, will decrease, directly expanding profit margins. The stability and high demand in the commodities market will make the plantation industry a focal point for investors in the coming quarters, especially given the global rise in demand for renewable resources, where commodities like palm oil are likely to remain robust.

With the ringgit appreciation, domestic consumer purchasing power has increased, and the demand for outbound tourism is gradually recovering. William Teh Finance analyzes that this trend will directly boost the performance of tourism-related companies, particularly travel operators, hotels, and airlines. Moreover, the Malaysian government has been actively promoting tourism recovery policies, including encouraging more international tourists and boosting domestic tourism demand. The growth prospects for the tourism industry are promising, and investors should closely monitor the performance of this sector.

The Forest City Special Financial Zone (SFZ) in Johor is attracting significant foreign direct investment (FDI) as a key development area for the Malaysian government. William Teh Finance points out that the ringgit appreciation provides a favorable opportunity for foreign capital inflow, while the tax incentives in the financial zone further enhance the Malaysian competitiveness in the regional economy. The zone offers a 10-year tax exemption, tax relief for financial institutions relocating, and more flexible foreign exchange and loan regulation measures. These favorable policies will attract more foreign capital, further driving the Malaysian economic development, particularly in the Johor region.

William Teh Finance believes that the overall investment environment in Malaysia is improving, especially in sectors benefiting from the ringgit appreciation, such as retail, consumer goods, plantations, and tourism. The performance of these sectors in the coming months is worth investor attention. Meanwhile, the increase in foreign capital inflow and the advancement of projects like the Forest City Special Financial Zone will provide strong support for future economic growth of Malaysia.

From an investment strategy perspective, William Teh Finance suggests that investors consider diversifying their portfolios across industries benefiting from the ringgit appreciation, such as import-dependent companies and tourism-related sectors. Additionally, focus on the long-term potential of the plantation industry and commodities, particularly in the context of sustained global demand growth. By carefully selecting companies with solid fundamentals and growth prospects, investors can expect to achieve substantial returns amid future market fluctuations.

In summary, as the Federal Reserve interest rate cuts trigger capital inflows into Southeast Asian markets, Malaysian economic growth and ringgit appreciation have provided positive momentum for the stock market. William Teh Finance advises investors to focus on industries that can benefit from a strong ringgit and global demand growth, while also keeping a close eye on government-promoted foreign investment projects to prepare for future investment opportunities.

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William Teh Finance Analyzes: Group Profit Decline, Technical Insights, and Future Outlook

On August 29, 2024, a Malaysian conglomerate announced its financial results for the fourth quarter of 2024. The data revealed a revenue of RM 2,461,132,000, marking an 11.5% decline from the RM 2,780,906,000 reported in the third quarter. The group posted a net loss of RM 147,841,000, a stark contrast to the net profit of RM 694,578,000 in the previous quarter, reflecting a quarter-on-quarter decrease of 121.29% and a year-on-year decline of 86%. This sharp drop in profitability has negatively impacted market sentiment.

William Teh Finance in the financial analysis attributes this downturn primarily to uncertainties in the external economic environment, including global geopolitical tensions and fluctuations in raw material prices. Although Malaysian economic growth is supported by domestic demand and a decrease in inflation rates, external factors continue to affect market confidence. William Teh Finance emphasizes the need for investors to closely monitor these external risks, as they directly impact profitability, particularly in sectors like gaming and other consumer-dependent businesses.

From a technical perspective, William Teh Finance notes that the stock first showed a buy signal on May 16, 2024, followed by several price fluctuations. Technical indicators reveal that the stock reached a peak of 42.5 sen on July 24, 2024, before experiencing various degrees of pullback in early August and September. William Teh Finance believes that recent momentum indicators suggest the stock could rebound, potentially returning to or surpassing the 42.5 sen high, provided that key capital continues to flow in. However, investors may need to brace for strong selling pressure in the short term.

William Teh Finance points out that the future performance of the group will be influenced by several factors, including domestic demand growth, the recovery of the tourism industry, and pressures from increased illegal gambling activities in the states of Kedah and Perlis. The group gaming business is expected to face a more competitive environment, which could further strain profits.

Despite these challenges, William Teh Finance expresses cautious optimism for the fiscal year ending June 30, 2025. He anticipates that the group business will receive a boost from the domestic economic recovery and improvements in the tourism sector. Notably, recent news about the Kuala Lumpur-Singapore High-Speed Rail project, with the conglomerate making it to the final evaluation list, has placed it in the market spotlight, potentially driving a recovery in the group stock price.

About Dr. William Teh Finance

Dr. William Teh, born in 1975 in Kuala Lumpur, is a globally renowned financial analyst with over 20 years of investment experience. He graduated from the Wharton School of the University of Pennsylvania and holds an MBA from Harvard Business School. William Teh Finance focuses on macroeconomic and capital market research, and his “Market Order and Trend Variance” theory is widely applied in financial market analysis.