2022 was a difficult year for stock markets around the world. The Russia-Ukraine conflict caused crude oil, natural gas, and other food prices to skyrocket, while the United States Federal Reserve raised interest rates, which caused a panic in the markets.
Closer to home, Malaysia’s stock market dropped by 4.6% in line with the global decline, leading many to be worried over their investments.
Still, it wasn’t all doom and gloom last year. Certain Malaysian stocks actually performed well, and you can identify the corresponding sectors to make better-informed investment decisions for 2023.
Here’s the list of the country’s top and worst-performing sectors in 2022, utilising data from investing.com and analysing returns from Dec 31, 2021 to Dec 30 last year.
The energy sector, as proxied by the Bursa Malaysia Energy Index, was the top performer last year, rising by 10.3%. In fact, 2022 was a very good year for most energy companies in Malaysia as crude oil and natural gas prices were high, leading many of these corporations to register strong profit growth.
The government also benefited from this, with Petronas’ profit rising by 120% to RM77.2 billion in the first nine months of 2022.
2022 was a good year for commodities in general. The plantation sector, as proxied by the Bursa Malaysia Plantation Index, rose by 8.1%, with palm oil prices increasing by as high as 69.7% to RM8,757.
The strength of Malaysia’s palm oil sector was aided in part by the strong recovery of India’s economy, which boosted demand for this particular commodity from Malaysian producers.
The finance or banking sector went up by 6% last year. Bank Negara Malaysia (BNM) raised its interest rate by 100 basis points from 1.75% in March to 2.75% in November, allowing financial institutions to charge higher interest rates on loans and register stronger profits for the year.
With the economy generally doing well in 2022, many households and companies were able to honour their debt obligations.
4. Consumer products and services
The Bursa Malaysia Consumer Products and Services Index rose by 1.5% for the year, buoyed in part by the reopening of borders and lifting of lockdown restrictions at the start of 2022.
Many consumer stocks benefited from Malaysians’ pent-up demand to buy things. Retail-sales growth shot up to 24.2% for the first 10 months of last year, compared with growth of only 4.4% the year before.
The Bursa Malaysia Technology Index declined by a whopping 34.3% for the year. As central banks around the world increased interest rates, the technology sector was the worst hit as investors fled. After all, technology companies, especially smaller ones, are inherently riskier investments to hold.
With the tensions between the US and China worsening, local electrical and electronics companies that supply components to China also took a hit
The crown jewel of Malaysia in 2020 has now fallen far. The Bursa Malaysia Healthcare Index comes in as the second-worst-performing sector with a decline of 25.5%.
The healthcare sector mainly comprises glove stocks, which were the talk of the town in 2020 when everyone bought them excessively. They have since declined considerably in line with higher vaccination rates.
3. Industrial products
The Bursa Malaysia Industrial Product Index declined by 10.3% for the year. Industrial and manufacturing companies were first hit by higher commodity prices that raised the costs of their raw materials.
Later, the worsening economies in the US, China and Europe in the second half of 2022 reduced demand for their products in global markets.
Finally, the Bursa Malaysia Property Index declined by 8.9% in 2022. This shouldn’t come as a surprise as higher interest rates by BNM made it more difficult for prospective homebuyers to obtain financing to buy homes.