The electronics manufacturing services (EMS) sector in Malaysia has seen mixed performance in 2024 despite being part of the broader tech upcycle, with rising costs, inflation, and supply chain disruptions offsetting growth from increased global demand and outsourcing trends. Key EMS Performances Winners : SKP Resources Bhd (+76% YTD) V.S. Industry Bhd (+47% YTD) NationGate Holdings Bhd (+51% YTD) P.I.E. Industrial Bhd (+29% YTD) Strugglers : ATA IMS Bhd (-8% YTD) JHM Consolidation Bhd (-36% YTD) Growth Drivers and Challenges Diversification Opportunities : The China+1 and Taiwan+1 strategies have positioned Malaysian EMS players to gain market share. However, reliance on major customers, such as Dyson, continues to be a concern. Cost Pressures : High inflation and production costs have affected profit margins. Company Highlights SKP Resources : Recorded a 27% y-o-y net profit increase , benefiting from a recovery in consumer demand. V.S. Indust...
The global economy faces a turbulent road ahead in 2025, with risks stemming from geopolitics, trade wars, and structural challenges in major economies.
Key Challenges:
- Trade War Risks: A potential Donald Trump presidency could spark a global trade war through import tariffs of 10% to 20%, escalating to 60% for Chinese goods, risking fresh inflation and economic slowdown.
- Geopolitical Uncertainty: Conflicts in Ukraine and the Middle East add unpredictability to global energy costs and supply chains.
- Economic Disparities: While wealthy nations grapple with voter dissatisfaction over cost-of-living crises, poorer countries face their worst economic state in two decades, exacerbated by weaker trade and funding conditions.
- Debt and Spending Strains: Governments face stretched budgets due to climate action, military spending, and ageing populations, raising fears of a potential financial crisis if debt levels continue to climb unchecked.
- European Political Deadlocks: Political stagnation in Germany and France hinders efforts to address investment shortfalls and skills shortages in the eurozone.
- China’s Transition: Mounting pressure on China to shift from manufacturing dependency to boosting consumer spending poses significant challenges for the world's second-largest economy.
Outlook for 2025:
- Interest Rate Trajectory: Policymakers are banking on central banks completing their return to normal interest rate levels, but inflation and geopolitical factors could disrupt this progress.
- Currency Pressures: A stronger US dollar could divert investments away from emerging economies and increase the cost of dollar-denominated debt.
- Global Stability: The IMF warns of uncertain times, with energy costs, trade policies, and voter dissatisfaction being pivotal factors shaping economic performance.
Implications:
The year ahead demands cautious optimism, with policymakers and financial markets bracing for volatility while striving to maintain global economic stability.
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