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This article first appeared in Capital, The Edge Malaysia Weekly, on December 21 - 27, 2015.    

IT has been a tough year for Malaysian equities, but exporters were the star performers in 2015 as the ringgit devalued by over 35% against the US dollar in the past 1½ years. While glove stocks booked modest double-digit gains in the year, small- and mid-cap exporters stole the show, with many doubling and tripling their share prices.

Furniture makers and plastics manufacturers dominated Bursa Malaysia’s Main Market gainers. Particle board maker Evergreen Fibreboard Bhd and plastic and mould maker VS Industry Bhd stand out due to their large market capitalisation of RM1.3 billion and RM1.7 billion respectively.

Among the few non-export-oriented players in the top 20 gainers is JAKS Resources Bhd. The pipe-maker owes its stellar share price performance to a US$1.4 billion Vietnamese power plant project it has got off the ground.

Over on the ACE Market, most of the top gainers were IT companies. However, one exception was Instacom Group Bhd which has been riding on about RM600 million worth of jobs awarded by CRCC Malaysia Bhd. CRCC is owned by China Railway Construction Group.

Notably, Instacom is the largest ACE Market company on the list with a market capitalisation of RM655 million, dwarfing a number of Main Market gainers and losers.

At the other end of the spectrum, the biggest losers on the Main Market were mainly oil and gas (O&G) companies, steel companies and the airlines. Hibiscus Petroleum Bhd was the biggest loser, down 71.76% during the year.

Hibiscus is joined by much-larger O&G companies like Dayang Enterprise Holdings Bhd and UMW Oil & Gas Corp Bhd. Dayang’s share price is not only languishing because of low oil prices, but also because of its untimely takeover bid for its subsidiary, Perdana Petroleum Bhd, as well.

While low oil prices would have helped airlines like AirAsia Bhd and AirAsiaX Bhd to save on fuel cost, the depreciation of the ringgit has bitten deep into their bottom lines. This is because the companies’ aircraft leasing costs are denominated in US dollars. The budget carriers saw their share prices fall by 65.3% and 50.74% respectively during the year.

Another notable loser on the list is Parkson Holdings Bhd, which has lost 55.5% of its value this year. The company, once known for its successful penetration into the Chinese market, is now grappling with intensifying competition and a slowing Chinese economy, leading the group to undertake drastic restructuring.

Meanwhile, the FBM KLCI has fallen 6.88% year to date to 1,640.14 points as at Dec 11, well on its way to a second consecutive annual decline. This would be the first time since 1997 that the benchmark index closed lower two years running.

Most of the FBM KLCI’s constituents ended the year lower, with only 7 of the 31 posting a YTD gain. The biggest drag on the index was Sime Darby Bhd, which has seen all its major business arms — property, automotive and plantations — hit by slower earnings.

The property sector has been lacklustre this year, as prices have gone too high and the effects of Bank Negara Malaysia’s tightening measures are fully felt. Vehicle sales have also taken a beating this year and are expected to post an annual contraction.

Meanwhile, the plantation sector continues to suffer from low crude palm oil (CPO) prices, which have been dragged down by a bumper soybean crop and low crude oil prices.

Sime Darby’s share price, down 23% YTD, dragged down the FBM KLCI by 24 points during the year.

Other major drags on the FBM KLCI were the telcos. Axiata Group Bhd and DiGi.Com Bhd saw their share prices fall by 14% and 19.07% respectively as at Dec 11. Combined, the two knocked 30.5 points off the FBM KLCI.

Most of the banks, like AMMB Holdings Bhd, CIMB Group Holdings Bhd, RHB Capital Bhd and Malayan Banking Bhd, also ended the year lower, dragging down the index by a cumulative 55.26 points this year. AMMB Holdings, for example, shed 33.13% of its share price this year while CIMB’s share price declined nearly 20% as at Dec 11.

Despite the sheer volume of money pumped into construction, this sector is noticeably absent from the lists of gainers and losers. It isn’t surprising, though, since most of their earnings have already been priced in. If the job flow starts to dry up, however, it could be a different story.

Looking back on 2015, exports appear to be a very thin silver lining in a huge dark cloud. If equities are a reflection of expectations of companies’ performance going ahead, 2016 may prove to be equally challenging if corporate earnings growth continues to be uninspiring.

Furthermore, some analysts noted that among the exporters, the high base effect on earnings would set in, thus, the jump in profit might not be easy to sustain in 2016.

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