StashAway Malaysia tips E&E, palm oil and O&G sectors to do well this year

PETALING JAYA: The construction industry is anticipated to flourish this year, followed by electrical and electronic products (E&E), palm oil, and oil and gas (O&G).

According to StashAway Malaysia country manager Wong Wai Ken, he observed that the construction industry seems to be recovering of late and expected it to improve throughout the year. The company is a Securities Commission-licensed investment platform designed for portfolio and wealth management.

“Big projects seem to have kicked off again and that should be good for the construction industry, which has been quiet for the last few years. E&E, palm oil and O&G industries are steadily growing,” Wong told SunBiz.

On the weakening ringgit, he anticipated the local currency to remain steady or strengthen slightly. At the same time, he pointed out that the local banking system is sound.

“Foreign direct investment, that's very bullish for the Malaysian economy. More investments into our country means there's more demand for ringgit, our fiscal position as well as our import and export position gets better.

“But a major factor behind the ringgit moving is also political stability. As long as there's political stability, we won't see a big drastic depreciation in the ringgit, hence Malaysia must do all it can to retain the ringgit strength,” he said.

On the outlook for 2024, Wong projected surprises or unforeseen circumstances. Last year, the success of technology and the influence of artificial intelligence on the markets took most people by surprise.

“Let’s look at where some of the surprises might appear. Conflicts or geopolitical wars could be a risk, maybe there will be a spreading conflict which has an effect on energy markets.

“In 2023, cash, tech and gold did very well. We ultimately won't know what will happen this year but if you're not diversified you're not even in a position to benefit from (the capital markets),” he said.

“Last year, we saw that cash was very popular because interest rates were very high. In Malaysia, fixed deposit rates and money market funds were giving anywhere between 3.5% and 4%, sometimes even more if there'are promos, so people really loved cash last year, but at the same time, US capital markets were up more than 20% because of tech stocks, especially the so-called “Magnificent Seven”.

The Magnificent Seven refers to the high-performing and influential companies in the US stock market, namely Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla.

“The tech sector was up 50%, so it pulled the (US capital) market up 20% ... cash was king and most people missed out on the markets, but people who were in the markets really benefited,” Wong said.

In terms of major risks this year, he said that if the US does not achieve a soft landing this year and if the US Federal Reserve maintains high interest rates, the US economy might be pushed into recession.

“The other risk is China, where the property market did not do so well last year, which affected its banking sector. If the Chinese market continues to be slow, consumption low, it means we cannot expect too much returns out of China.

“Moreover, if Donald Trump wins the US presidential election in November, businesses, business leaders and investors will be very sceptical about what to do. What will he really do to shake things up?,” he opined.

On consumer demographics, Wong said most of its users range between 35 and 40 years old, working as white collar professionals with a majority from financial institutions, tech or O&G industries.

“Above 70% of our users are in Klang Valley, with Penang and Johor making up the rest,” he added.

Currently, StashAway has presence in Singapore, Malaysia, Dubai, Hong Kong and Thailand, with Malaysia as its second largest market, while Singapore occupies the top spot.

“After that, Dubai, Hong Kong and Thailand are about equal in terms of size,” Wong shared.

The company currently has no plans to expand to a new market as it will focus on strengthening its position in the five existing markets it occupies through new offerings.

“We think that there’s significant growth in the five markets to add, so there’s no plan to expand to a new market. We want to expand within the countries that we are already in, either by introducing new products or entering into new channels, such as working with digital banks, which we will think about.

“The ways we can reach people to grow their wealth, the better. We just have to do it a way where we don't have to sacrifice our principles, which is affordability and convenience,” Wong said.

On the new offerings, he said it will be an ongoing process and the company is still in the discussion phase. He does not expect talks to finalise in the next few months.

In terms of fund performance, Wong said the company recorded a return average of between 16% and 23% last year.