This article first appeared in Capital, The Edge Malaysia Weekly on September 1, 2025 - September 7, 2025
MALAYSIA’s stock market has spent much of the past decade on shaky ground. From its post-Global Financial Crisis (GFC) peak in 2014 through 2023, the FBM KLCI lagged behind both global and regional equity markets.
Permodalan Nasional Bhd president and group CEO Datuk Abdul Rahman Ahmad referred to this period as “Malaysia’s lost decade” in an interview with The Edge early this year, noting that the share price returns of FBM KLCI on three-, five- and 10-year bases up to end-2023 had been flat to negative.
Indeed, this period was marked by foreign outflows, a ringgit on the back foot amid political uncertainty and a stock market bellwether still dominated by old-economy stalwarts that paid steady dividends but faced challenges in expansion.
Abdul Rahman noted that from a total return (price plus dividends) perspective, the KLCI barely showed any gains over the period, while price returns alone were negative. He added that a simple fixed deposit likely would have outperformed.
From 2014 to 2023, the FBM KLCI fell 22.08%, significantly trailing global bellwethers such as the Standard & Poor’s 500 index (+158.06%), Dow Jones Industrial Average (+127.37%) and Nasdaq Composite index (+259.42%), as well as China’s CSI 300 (+47.26%). Hong Kong’s Hang Seng Index performed worse than the KLCI, falling 26.86%.
Within Asean, the KLCI compared unfavourably against the Jakarta Stock Exchange Composite Index (+68.79%), Singapore’s Straits Times Index (+2.3%) and the Stock Exchange of Thailand Index (+15.03%). While the KLCI posted negative returns during the 10-year period, the FBM Mid 70 Index emerged with a 3.04% gain. However, the market-wide FBM Emas Index slumped 15.79% (see Chart 1).
“Ringgit weakness and foreign outflows crushed returns,” says Tradeview Capital chief investment officer Nixon Wong.
He recalls that the ringgit slid from around 3.2 to the US dollar in 2014 to between 4.3 and 4.6 through 2024, weakening nearly 40%, which “torpedoed US dollar returns and discouraged foreign flows, even if ringgit profits seemed acceptable on absolute corporate earnings in ringgit terms”.
According to the Securities Commission Malaysia, foreign holdings in 2023 stood at 19.5%, representing a significant decline from previous years. According to news reports, foreign shareholding peaked at 27.5% in April 2007, before the GFC.
“That persistent mix — of a weak ringgit and lower foreign participation — kept multiples compressed despite decent dividends of close to 4%,” says Wong.
The decade was marked by the 1Malaysia Development Bhd scandal in 2015, the introduction of the goods and services tax (GST) in the same year and the reversal to the sales and service tax (SST) in 2018, as well as political uncertainties as the country saw four prime ministers between 2018 and 2022 amid the Covid-19 pandemic.
From 2014 to 2023, Bursa Malaysia’s Technology Index stood out as a strong performer, benefiting from the semiconductor upcycle and electronics export boom in 2020 and 2021. Another notable performer was the Industrial Products and Services Index, which posted a positive return of 22.54% as of December 28, 2023. Although the Movement Control Order in March 2020 temporarily shuttered factories nationwide, the sector rebounded with global reopenings and increased export demand, emerging as a key beneficiary of the pandemic recovery (see Chart 2).
The index was held up by Petronas Chemicals Group Bhd (KL:PCHEM) and Press Metal Aluminium Holdings Bhd (KL:PMETAL), whose total returns over the period stood at 45.61% and more than 100% respectively.
Several other sectors ended in negative territory, including the Consumer Products and Services Index (-5.96%), along with the construction (-30.98%), financial services (-3.88%), plantation (-21.56%) and property (-33.18%) indices. The Consumer Products and Services Index was affected by the rollout of the GST in April 2015 and the weaker ringgit, both of which eroded purchasing power. While consumer staples and some discretionary segments saw a rebound during the pandemic and a recovery in 2020 and 2021, momentum slowed in subsequent years as companies passed on price increases and other additional taxes — namely the one-off Cukai Makmur — as well as rising commodity costs.
The construction index initially rose on project optimism earlier in the decade, but took a hit after a policy reset, following the 14th General Election in May 2018. The LRT3 project was downsized, with total costs cut by 47% — from RM31.65 billion to RM16.63 billion — and several stations scrapped (though later revived). The East Coast Rail Link was suspended, then renegotiated and resumed at a reduced cost of RM44 billion, down from RM65.5 billion. This was followed by the termination of the KL–Singapore High-Speed Rail on Jan 1, 2021. By end-2023, the construction index remained below its 2014 level, with sentiment improving only as mega-projects were gradually reactivated. These included the reinstatement of LRT3 stations and the approval of the Penang LRT project.
The Financial Services Index, anchored by banking heavyweights, did well early on during the period in question but was affected by the selldown by foreign funds when the ringgit weakened amid bad publicity over 1MDB.
As for the Plantation Index, the rise of locally delivered crude palm oil price to RM8,000 per tonne in 2022 did little to offset poor investor interest in the sector due to ESG (environmental, social and governance) considerations. The sector was also beset by labour issues due to border closures, stricter recruitment post-2020 and high fertiliser prices.
As for the property sector, the removal of the Developer Interest Bearing Scheme (DIBS) at end-2013 ended the property sector’s bull-run. Consequently, the sector languished under oversupply and affordability constraints. As experts note, clearing inventory takes time even as policy tone improves.
The performance review of other indices were not possible because of incomplete data.
Asked about investing during the period, Wong says: “The banking sector delivered stable, mid-teens CET1 (common equity tier-1) and 9% to 11% ROE (return on equity) for much of the decade, solid yet below Singapore and Indonesia (Singapore banks achieved mid-teens ROE in 2023; Indonesia’s top lenders around the high teens).
“As for power and utilities such as Tenaga Nasional Bhd (KL:TENAGA), which [has been] under the Incentive-Based Regulation with ICPT (Imbalance Cost Pass-Through) since 2014, earnings quality improved but faced a capping of upside due to regulated returns. Payouts are reasonable but growth relies on electrification and renewable energy rollout.”
He observes that CelcomDigi Bhd’s (KL:CDB) elevated dividend payouts — above its 50% policy — had limited growth as the telco sector grappled with a decade of price competition and regulatory inconsistency. The shift to a dual-network 5G model, along with rising demand for enterprise and data centre connectivity, now offers renewed optimism. Still, prolonged uncertainty under the single-wholesale-network 5G model created policy noise, raising Malaysia’s equity risk premium as investors struggled to price in the risk.
He notes that the KLCI was dominated by financials and other defensive stocks, while higher-growth tech or new economy companies were largely absent. Government-linked companies made up more than a quarter of the market capitalisation, he says, influencing both incentives and capital allocation. With few blockbuster IPOs, the index stagnated — its 2014 high of 1,896 remained unmatched, and it ended 2023 at a lower price level.
High-net-worth investor and former stockbroker Ian Yoong says: “Malaysia’s index heavyweights lack the exciting growth prospects story of the Magnificent 7, which are mainly AI- and technology-related.”
Market veterans whom The Edge spoke to note that Indonesia combined reforms with a clear industrial narrative — ranging from infrastructure expansion and the job creation law to nickel downstreaming — which attracted foreign direct investment and boosted banks’ return on equity. In contrast, Singapore’s banks delivered strong total returns through higher interest rates and a robust dividend culture, despite relatively flat share prices.
Meanwhile, sector narratives such as tourism in Thailand and consumption in the Philippines provided pockets of support for these nations. Malaysia, in contrast, spent much of the decade wrangling policy resets and reputational repair.
Wong explains that the oil crash from 2014 to 2016 severely cut capital expenditure pipelines in the oil-and-gas services sector while downstream chemicals faced a cyclical slump by 2023. He adds that the collapse in oil prices also affected state revenue, which highlighted the broader economic headwinds. Wong says the glove sector experienced a “spectacular post-pandemic average selling price collapse” that reversed the pandemic-driven surge in profits from 2020 and 2021, and the industry is still adjusting to excess capacity and pricing pressures.
Looking ahead, Yoong remains positive on Malaysian stocks, highlighting Tenaga and CIMB Group Holdings Bhd (KL:CIMB) as favourites.
He notes that Tenaga’s RM5.05 billion tax bill has already been priced in, but the rising electricity demand from data centres remains an undervalued growth driver.
He describes CIMB’s 45% stake in TNG Digital Sdn Bhd — operator of the Touch ’n Go eWallet — as a “goldmine”, as TNG dominates Malaysia’s e-wallet market with a share of 60% to 70% and boasts 92% user penetration among surveyed consumers in the past three months. Although CIMB recognises TNG as a unicorn, the stake appears undervalued on its balance sheet. CIMB currently trades at a trailing price-to-earnings ratio of 10.2 times, a dividend yield of 5.4% and a price-to-book ratio of 1.16 times, Yoong says.
Yoong also likes the Johor-Singapore Special Economic Zone (JS-SEZ) story. “This will be very positive not only for Johor and Singapore but the whole country. This is effectively a vote of confidence by one of the best-run countries in the world,” he says.
Notably, policy initiatives by the government such as the National Energy Transition Roadmap, the National Semiconductor Strategy and the New Industrial Master Plan 2030 caught investors’ attention last year. In 2024, the FBM KLCI reached a high of 1,684.68 — a level last seen in 2020 during the pandemic, when government measures to alleviate loss of income and increased retail investor activity, among others, drove the market. The index delivered a total return of 17.58% for the year.
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