(July 1): Last week, I wrote about why the Malaysian stock market has been a chronic underperformer. To recap, we tabulated the revenue and net profit of all 855 companies listed on Bursa throughout the past five years, from 2014 to 2018.
Despite marginal top-line growth — revenue increased at a compound annual growth rate (CAGR) of 2.6% — total net profits fell 6.8% annually, on average. Margins for all sectors came under pressure throughout the five years. No surprise, then, that the FBM KLCI and FBM Emas Index ended in the red in four of the past five years. I also wrote about some of the structural issues that are the likely causes of the persistent earnings decline.
We will repeat the same methodology for companies listed on the Singapore Exchange and tabulate the results in my next column. The Straits Times Index too did not do well between 2014 and 2018, with a CAGR of -2.3%, on average. We will also take a quick look at other regional market performances during this same period.