Predictions for Budget 2025: What to Expect?
As the global and local economic environments evolve, Budget 2025 is expected to introduce measures that continue to focus on growth and resilience. Here are some key predictions for the upcoming budget and how Bursa Malaysia might react:
- Continued Emphasis on Infrastructure & Housing: The government is likely to allocate more funds toward housing development, urban renewal, and public infrastructure. As seen in previous years, this will likely have a positive impact on construction, property, and infrastructure-related stocks.
- Digital Economy and Technology: Given the increasing importance of digitalization, Budget 2025 is expected to support the technology sector. Investments in the gig economy, 5G infrastructure, and digital platforms could see technology stocks outperforming the broader market.
- Targeted Subsidy Reforms: The ongoing adjustments to fuel subsidies could create some volatility in consumer sectors. However, the focus on targeted subsidies, particularly for the lower-income groups, might stabilize consumption-related stocks over time.
Predicted Market Reaction for 2025
- Positive Outlook for Infrastructure and Construction: With continued government spending on infrastructure, construction-related stocks are likely to remain attractive. Investors will closely monitor government contracts and incentives that could boost company revenues.
- Technology Resilience: Technology companies, particularly those involved in digitalization efforts and the gig economy, are expected to continue performing well. The digital economy has been a strategic focus, and this is likely to remain the case in 2025, keeping tech stocks on an upward trajectory.
- Volatility in Consumer Sectors: The introduction of targeted subsidies may lead to fluctuations in consumer products and services stocks, as investors react to changes in consumer spending patterns due to the new subsidy structure.
Stock To Watch
1. Gamuda Berhad (Infrastructure & Construction)
Gamuda is one of the largest players in Malaysia’s construction and infrastructure sector, and its stock is well-positioned to benefit from the expected increase in government spending on public infrastructure in Budget 2025. The company’s involvement in major infrastructure projects such as MRT Line 3 and flood mitigation efforts positions it for steady revenue growth.
Compared to its competitors, Gamuda has a higher net profit margin of 7.6%, which is above the industry average of 5%, indicating stronger profitability. Moreover, its debt-to-equity ratio of 0.46 is lower than many peers, showing better financial health and lower risk exposure.
Over the past year, Gamuda’s stock price has risen by 12%, reflecting positive market sentiment and solid project execution. The current price of Gamuda Share is Rm8.1 and have the potential to up 11% to Rm9 based on Consensus estimation on Shareinvestor.com.
2. Hextech Berhad (Technology & Digitalization)
Hextech is involved in providing IT solutions and has been actively growing its presence in digital transformation initiatives. With Budget 2025 expected to focus on further investment in digital infrastructure, Hextech could see a boost in revenue, particularly in projects related to cloud computing, cybersecurity, and public-sector IT initiatives.
Hextech’s revenue of 25% is comparable to its peers in the tech sector. However, it has a relatively lower P/E ratio of 10x, which makes it an undervalued opportunity in the market, particularly given its ongoing projects in the public sector.
Over the past two years, Hextech’s stock has risen by around 35%, largely driven by its focus on digitalization efforts. In FY2024, Hextech recorded revenue growth of 16%, driven by its successful entry into new markets. With Budget 2025 expected to prioritize investments in technology making it an attractive stock for investors eyeing the tech sector.
3. Eco World Development Group Berhad (Property & Housing)
Eco World is expected to benefit from the government’s ongoing efforts to improve housing development and urban renewal, as outlined in the upcoming Budget 2025. With a large portfolio of affordable housing projects, the company stands to gain from the increased allocation of funds toward housing for lower-income groups.
Eco World’s price-to-earnings (P/E) ratio of 11x is lower than its industry peers, indicating that the stock is undervalued compared to competitors like Sime Darby Property (P/E ratio of 15x). Additionally, Eco World has a gross profit margin of 28%, reflecting stronger cost management compared to industry peers.
The company has seen a stock price increase of 28% over the past six months. With new property launches planned and continued demand for affordable housing, Eco World’s revenue is expected to grow by 9% in FY2025, according to consensus estimation.
Conclusion
Malaysia’s national budget announcements have historically had a mixed but significant impact on Bursa Malaysia, with sectors like infrastructure and technology being the primary beneficiaries. Budget 2025 is expected to continue building on the government’s focus on growth, sustainability, and digital transformation, potentially lifting key sectors like construction, green energy, and technology.
Investors can leverage ShareInvestor.com to stay ahead of these market movements. The platform’s comprehensive features, such as analysis charts, consensus estimation, and stock screening tools, can help investors make strategic decisions during critical periods like the national budget announcement.
Disclaimer: The information provided is for educational purposes only and does not constitute financial advice. Investment in securities involves risks, and investors are encouraged to do their own research or consult with a financial advisor before making any investment decisions.