If you invest in the stock market, this year would have been off to a rocky start. Global markets are still uncertain, with inflation in the United States increasing risk for investors everywhere; while the pandemic is ongoing after two years, impacting industries and economies around the world.
Which sectors, then, had a good 2021? Here is a rundown of the best- and worst-performing industries in Malaysia last year, using data from Investing.com, and according to classifications provided by Bursa Malaysia.
Percentages of growth or decline are calculated using monthly index data from January to December 2021.
For example, the property sector last year had an index of 669 points in January and 704 points in December. The performance is measured by dividing December’s figure by January’s, which equates to 5.2%.
Best
1. Industrial products and services
The industrial products and services sector proved best-performing in 2021, registering growth of 19.8% and trending upwards from 169 points in January to 203 in December.
Industrial products and services consist of auto parts; building materials; chemicals; diversified industrials; industrial engineering; industrial materials, components and equipment; industrial services; metals; packaging materials; and wood products.
The industry was able to produce for both domestic and international markets as most countries opened up following vaccination drives last year.
2. Technology
This sector registered growth of 17.9% last year, growing from 82 points in January to 97 by year-end.
The technology sector consists of digital services, semiconductors, software, and technology equipment.
Malaysia’s semiconductor industry is among the top 10 in the world, encompassing about 7% of the global trade in backend assembly tests and packaging.
Last year, despite the pandemic, companies continued to embark on digitisation initiatives to adapt to the changing landscape of business being conducted online.
This benefited firms that offer digital services, software, and technology equipment.
3. Transport and logistics
From 745 points in January to 861 in December, this sector registered growth of 15.6%.
Transport and logistics became ever more important during the pandemic as online shopping and deliveries saw high demand, which also benefited firms selling transport equipment.
4. Financial
This is probably the most surprising sector to be on the best-performing list. Finance grew by 7.6% last year, trending upwards from 14,464 to 15,566 points.
The sector consists of banking, insurance, and other financial companies.
Basically 2021 was a rebound year for the economy despite low interest rates, which makes sense if more people and companies borrowed from financial institutions on the back of a strengthening economy.
Worst
1. Healthcare
How the mighty hath fallen. The healthcare sector was the worst-performing in 2021, registering a decline of 35.1% from 3,598 points in January to 2,336 in December.
The healthcare sector consists of equipment and services, care providers, and pharmaceutical companies.
This could be attributed to local companies that manufacture and sell gloves, which ostensibly experienced high sales volume in 2020 and steep declines the following year as vaccinations increased.
Companies providing healthcare services also experienced a drop in business when hospitalisations decreased accordingly.
2. Energy
Energy registered a decline of 11.3% in 2021, trending downwards from 793 to 704 points.
The sector consists of infrastructure, oil and gas, and other energy-resource companies.
Despite oil prices improving from US$42 per barrel in 2020 to US$71 last year, the energy sector in Malaysia did not seem to benefit.
This is perhaps due to the fact that mining in the country has been in decline: in 2016, this sector’s gross domestic product grew by 2.2%, only to shrink in 2018 (-2.2%) and 2019 (-0.6%) even before the pandemic.
3. Plantation
This sector dropped 7.7%, from 7,098 to 6,552 points. Malaysia’s plantation sector consists mainly of palm oil companies.
Consistent with energy, the plantation sector still declined even though the price of palm oil futures increased last year from RM3,935 in January to RM5,159 in December.
This could be attributed to the ban by Europe on palm oil from Malaysia, which affected the sector negatively.
Source: https://www.freemalaysiatoday.com/category/leisure/money/2022/02/17/malaysias-best-and-worst-performing-sectors-in-2021/