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“Malaysia market where can invest one?” That’s one of the most common comments I always hear from uncles and aunts that I talk to. Even young people say Malaysia is ‘not vibing’ or ‘boomer’.

I get their point. The Ringgit is not doing well. Last I checked, it was trading at around RM4.70 per U.S. Dollar. This is one of the weakest levels it has been and everyone is taking this narrative and running with it like a gazelle in heat.

Let me tell you. Every market around the world will have its pros and cons. But every one of them always have opportunities. We just have to sit down and understand the nature of the beast.

I have been investing in Malaysia’s market for a good 4 years (not frequently, and I am still not that great at it). And here’s what I found to be a good fundamental starting place for you.

Let’s look at this beginner’s part 1 guide on how to invest in the Malaysian market! We will be focusing on the introduction of the type of industries in Malaysia and trying to match your investment profile to them.

Let’s Look at the Key Sectors in the Malaysian Stock Market

There are many types of companies in the Malaysian market. But let’s take things one by one.

Firstly, you have the FBMKLCI. The biggest 30 companies in Malaysia are there. And this is a good starting point to look at Malaysia’s market. Here are the top 5 companies by size right now:

1. Maybank (RM115 billion)
2. Public Bank (RM82 billion)
3. CIMB (RM71 billion)
4. Tenaga Nasional (RM67 billion)
5. Petronas Chemicals (RM55 billion)

Now, if you look at this list, 3 of them are banks, with two more related to the energy sector. These two sectors will be the start of your journey.

Banking

Here’s how to understand the banking sector. A bank takes in money from its customers, lends it out to businesses and people and collects interest. That’s essentially how a bank makes money.

As long as businesses and people need loans and money, banks will continue to make money. They act as a middleman for money and funds.

In Malaysia, they have become the cornerstone of the economy. During the 1998 Asian Financial Crisis, some Malaysian banks were in trouble and hence, were merged.

Today, most banks in Malaysia are big. It is very hard to find a small bank. And size matters when it comes to investments. The bigger you are, the more ability you have to withstand shocks and risks.

To look for banking or finance companies, you can make your way to this link here for all of them.

Energy / Utility

The energy or utility sectors can be considered together here. Firstly, both the utility and energy sectors go hand-in-hand.

According to the BP World Statistics data, 92% of Malaysia’s primary energy consumption is from fossil fuels which include crude oil (36%), natural gas (37%) and coal (19%) in 2022 (so much for renewable energy).

And Tenaga Nasional Berhad is Malaysia’s biggest electricity provider and is a monopoly in Peninsular Malaysia.

Who is the biggest producer of crude oil and natural gas in Malaysia? Petronas.                  

Crude oil and natural gas are used to generate electricity. And also power all manners of transportation in Malaysia.

Everyone uses electricity. It is the lifeline of an economy and without it, businesses are like lost ducks in water. No matter a boom or recession, demand for electricity and indirectly for crude oil and natural gas will always be there.

And it’s not just electricity. Water and sewerage are also essential. Water is a basic necessity, and without sewerage services, we will be covered in shit.

Investing in energy and utility companies is akin to investing in basic human necessities.

You can find these energy and utility companies on Investing.com.

Industrial Products & Services

The industry or manufacturing sector should be on your radar. Do you know that Malaysia has a big electrical and electronics (E&E) industry in Penang and Selangor?

Many of the international companies in the U.S. and China seek out Malaysian companies for many of their design, testing and outsourcing services.

According to Department of Statistics Malaysia, the E&E industry contribute 6% to Malaysia’s GDP in 2022. On the FMKLCI, Inari Amerton makes it to the list as an E&E player with a size of RM12 billion.

However, E&E is not the only thing Malaysia has. Two industries come next – petroleum (3% of GDP) and chemical & pharmaceutical products (2% of GDP).

The petroleum industry is the refinement of raw petroleum to refined petroleum. This is mainly centred on the oil & gas hubs in Johor (Petronas Pengerang), Sarawak (Bintulu, Miri), Terengganu (Kerteh) and Sabah (Kota Kinabalu).

Meanwhile, the juggernaut in the chemical industry is Petronas Chemicals Group. It produces specialty chemicals, polymers, olefins, glycols, methanol, ammonia, and isononanol.

Wholesale & Retail (Consumer)

Did you know? About 60% of Malaysia’s GDP consists of services companies. What do services here mean? Anything that provides a service to you whether through selling stuff, medical, or engineering are considered services companies.

They are considered consumer-centric companies as their products end up in consumer hands.

Two industries that you should pay attention to first – wholesale and retail.

Wholesale is a middleman company of buying from factories or importing from overseas, and selling them to retail stores. It can also sell straight to consumers.

Retail companies buy from wholesale companies and sell them to consumers.

Both of these industries make up 16% of Malaysia’s economy. And surprise, surprise. Petronas Dagangan is a major retailer here. It sells mostly downstream oil & gas products.

Meanwhile, Mr DIY also makes it to the FBMKLCI list. It sells all your favourite home DIY stuff.

Other Sectors

There are other sectors too. Here is a list of the rest of them:

1. Construction, Property, and Real Estate Investment Trust
2. Healthcare
3. Plantation
4. Technology
5. Telecommunications & Media
6. Transportation & Logistics

Low-, Medium-, and High-Risk Profiles Matching

Firstly, before you invest, it’s important to determine how much risk you want to take.

Once you have done that, you can determine the type of companies that you can consider investing in.

As a start, if you are of low risk, here are the sectors that you should consider in Malaysia:

1. Banking: Banks have steady dividends and stable revenue and profits. They are the bedrock of the Malaysian economy. And rain or shine, banks will always be there.
2. Utility: Steady dividends also. Everyone needs electricity, water and sewerage services no matter the state of the economy.
3. Healthcare: Everyone needs healthcare services. While not as low-risk as banking or utility, they do present consistent dividends and will always be in demand from people.

If you are in the middle or medium-risk, here are the sectors to consider:

1. Wholesale & Retail: These companies are dependent on consumer spending. If the economy is doing well, consumers will spend more. But if it’s not, these companies could suffer.
2. Transportation & Logistics: Same with wholesale & retail, the more consumers spend on, the more wholesale & retail companies would need transportation and logistics services.
3. Telecommunications & Media: Telecommunications companies in Malaysia compete quite ferociously against each other. Hence, they do have more risks when it comes down to it.

If you like going to the casino, these are the sectors you should look into:

1. Plantation: In Malaysia, many have the impression that palm oil companies are sort of steady. That’s further from the truth. Agriculture in essence is risky. All kinds of risks will affect them – weather, world commodity prices, wars fought halfway across the world, government regulations, etc.
2. Energy: Same with energy also. In Malaysia, there is an emergence of solar companies. But they are considered risky now as they are still small. Meanwhile, oil & gas companies are exposed to all manner of risks too – other country’s geopolitics, world prices, OPEC decisions, etc.
3. Technology: Tech companies in Malaysia are .. well. I won’t put too much emphasis on them. They are risky for sure. But many also operate on unsustainable business models, and are valued just for their ‘future’.

Conclusion

Part 1 covers the types of sectors in Malaysia that you can consider investing in. Different risk profiles will have preferences for different sectors.

If you are struggling to get started or are pessimistic about the Malaysian market, consider using this information to change your mind about the Malaysian market.

There are always opportunities in every market.