Inve$t | Market Sentiments | 25 August 2023
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According to The Securities Commission Malaysia (SC) executive chairman Datuk Seri Dr Awang Adek Hussin, the financial planning industry has grown considerably and played an increasingly pivotal role in the financial well-being of many Malaysians. Between 2015 and 2022, the number of financial planning firms increased by 42%, from 31 to 44 firms as at end-2022, while the number of licensed representatives grew by 145% over the same period to 1,455.
It is important for the financial planning industry to keep up with changing market conditions and investor demands. In his keynote address at the Financial Planning Association of Malaysia (FPAM) Annual Signature Financial Planning Symposium 2023, he said that he financial planning industry must broaden its offerings to meet investors’ preference for socially responsible investment (SRI), invest in technology for more personalised services and build a skilled talent pipeline for the future.
Regional and local wealth trends indicate that investors are seeking holistic investment strategies that consider their entire portfolio, rather than focusing on individual products. The evolving service model and access demanded by clients is led by increased demand for personalised advice with deeper investor engagement over the long term. Towards this end, the SC seeks to facilitate and empower firms and consultants to move towards more comprehensive wealth management offering across the capital market and financial sectors in a bid to meet Malaysians’ evolving needs.
He urged the industry to take more initiatives to build talent pipeline at their own accord by collaborating closely with universities and other professional associations to enable firms and industry associations to develop courses to mould the next generation of financial planners and ensure a steady stream of high-quality local talents. Through these means, the industry will be able to cultivate the next generation of talent, ensuring the sustainability and continuity of the Malaysian financial planning industry, he said.
Initiatives under the Madani Economy framework are expected to improve investor confidence in the Malaysian economy and attract greater inflows and foreign investors into the domestic capital market. This in turn will provide better opportunities for financial planners to expand their client base as well as enable existing clients to grow their wealth.
The government is also looking at policies to facilitate and attract the setting up of family offices in Malaysia with the aim of attracting a larger pool of investors to support financing for small and medium enterprises (SMEs) and the new economy. These family offices will require specialist advice in a broad range of investments and services, from traditional investments to tax and estate planning to name a few.
Licensed financial planners are uniquely placed to capitalise on this invaluable opportunity to service family offices that will be looking to set up operations in Malaysia.
Sub-Title: Economic growth in Malaysia to pick up in 2H2023 – BMI
According to BMI, a Fitch Solutions company, Malaysia’s economic recovery over the coming quarters will be slower than it initially expected due to the ongoing impact of weakening global demand and tight monetary conditions. The firm said Malaysia’s real GDP growth slowed sharply to 2.9% year-on-year in 2Q2023 from 5.6% 1Q2023, falling below consensus and house expectations. Overall, our forecast for Malaysia’s real GDP growth has been revised down to 4.0% in 2023, from 4.2% previously, marking a sharp slowdown from 8.7% in 2022. The new forecast is slightly below consensus estimates of 4.2%.
The weaker-than-expected reading for 2Q2023 leaves its prevailing 2023 growth forecast of 4.2% looking too upbeat, as it suggests that the economy must grow by an average of 4.1% y-o-y in the second half of 2023. However, this will be challenging to attain given the backdrop of weakening global demand and tight monetary conditions.
Malaysia’s economic resilience was mainly driven by consumption, but this strength is expected to falter as the impact of tight monetary conditions feeds through the economy. Beyond domestic challenges, it maintains the view that weakness in global demand with a forecasted growth of 2.4% across 2023 will keep a lid on Malaysia’s export performance this year.
Net exports already removed 0.7 percentage points (pp) off GDP growth in the second quarter, extending the -2.3pp in the first quarter. The year-to-date nominal figures further showed exports contracting by an average of 5% y-o-y in the first seven months of the year, with a sharp contraction of 14% y-o-y in June, although this eased to a contraction of 13% y-o-y in July.
However, two factors – domestic challenges and weakness in global demand – could point to the fact that most of the weakness could now be behind us.