As we settle into 2023, it’s crucial to be mindful of trends and developments affecting the global and Malaysian economies. Technological advancements and progressive awareness towards sustainability are likely to influence the investment decisions this year. So, what can we anticipate in 2023? Let’s explore some trends which will shape the investment landscape and how they can impact your investment strategy. Remember, regardless if you are a seasoned investor or starting out for the first time, you need to keep an eye out for these trends. Due diligence and consultation with the right registered financial advisors would help you make an informed decision.
Table of Contents
1. Sustainable Investing: ESG and Impact Investing
Environmental, social, and governance (ESG) investing has gained significant momentum in recent years. It will not slow down in 2023. A McKinsey survey shows that 94% of CXOs across many departments, such as finance, HR, legal, IT, procurement, and real estate, reported increased responsibilities relating to ESG compared to three years ago.
Impact investing, which involves investing in companies with a positive social or environmental impact, is also expected to gain traction in Malaysia. These investing trends align with the government’s focus on sustainable development, and investors are likely to see more investment opportunities in companies that prioritise ESG factors and positively impact society and the environment.
2. Technology: Innovation and Disruption
The number of internet users in Malaysia increased to 29.5 million in 2022 from about 29 million in the year before. By 2028, it’s predicted that nearly 32 million Malaysians will be online. With the rise of digital technologies and e-commerce platforms, investors are increasingly looking to invest in Malaysian tech startups and companies, especially well-positioned ones so investors might benefit from the growing digital economy investing trends.
However, these advancements also pose risks. Cybersecurity threats and job displacement, a real fear that 71% of Malaysians feel, loom over the horizon. Investors should be aware of this when making investment decisions.
3. Infrastructure: Investments in Resilience and Sustainability
With investing trends in infrastructure, usually, there’s a concern with climate-risk issues. A substantial portion of the investors—nearly 30%—submitted shareholder proposals on climate-risk-related problems. No wonder infrastructure investments, particularly in sustainability and resilience, are becoming increasingly important. In addition to that, the 2030 Sustainable Development Goals (SDG) has shaped policies by the Malaysian Government, the State governments, as well as local governments. This consideration will impact how infrastructure projects are being prioritised and planned. For example, investment into telecommunications infrastructure is not without costs and opportunity costs. While it heralds an era of seamless and stable connectivity throughout the country, the infrastructure erected may impact the environment.
4. Consumer Behaviour: Shifts in Spending Patterns
Consumer behaviour is sensitive to economic and technological developments. A survey done by Statista shows that 50% of respondents prefer to make purchases using mobile devices, compared to 46% of respondents who still prefer to shop in-store. Footfall into brick-and-mortar outlets no longer guarantee purchases with other alternatives at the consumer’s disposal. Riding on this trend, the Malaysian Government introduced the 10% sales tax on low-value goods (LVG). These are goods under RM500 purchased by Malaysian consumers through online platforms and delivered by overseas vendors.
Aside from that, Malaysia’s growing middle-class population is expected to drive demand for education, leisure activities, and healthcare—where in 2027, the sector is expected to grow to RM 127 billion. There’s also a demand for more sustainable and ethical products and services.
5. Geopolitical Risk: Volatility and Uncertainty
The global landscape is laden with various geopolitical conflicts. These conflicts span from US-China tensions to COVID-19 pandemic outbreak and made worse by the war in Ukraine. Everyone, including investors, face with increased uncertainty. Many executives (81%) are forced to alter corporate strategies and investment planning due to geopolitical challenges. Preparing geopolitical risk management can be beneficial for companies.
In adversity comes opportunities. Malaysian investors can benefit from such opportunities. At the same time, they should stay updated on government policies and regulations, as changes in these policies can impact investment opportunities.
The 2023 investing trends in Malaysia show a bright future for the market. Sustainable investing, technology disruption, infrastructure resilience, and consumer behaviour shifts will likely drive investment trends.
Investors who can identify and capitalise on these emerging investing trends will likely outperform over the long term. They might face fiercer competition in 2023 since many foreign investors are considering investing in Malaysia. For example, 50% of German firms in Malaysia are planning to develop their businesses by investing more in 2023.
Prepare for the worst by watching the news regarding market uncertainties and focusing on risk management strategies.