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03-06-2023, 11:04 AM
The Bursa Malaysia construction sector had a very challenging past decade that pre-dates Covid-19. The chart below is taken from my article Making sense of the Bursa Malaysia construction sector.
It tracks the sector ROE for the sector over the past 12 years.
![[Image: Bursa-construction-ROE.png]](https://i.postimg.cc/pdL96cdK/Bursa-construction-ROE.png)
You should not be surprised to see the sector ROE declining. In the first half of the decade, the sector mean ROE for many years can be considered to be comparable to that of 2010. But thereafter it began to decline so by 2019 (before the pandemic) it was already lower than that in 2010. Of course, the pandemic caused it to go into negative territory in 2020 and 2021.
I think the Malaysian property market has reached the bottom of its cycle and should recover in the near future. The construction sector should follow suit. Another positive sign is that we expect better GDP growth given the opening of the economy.
There is a close link between the Bursa construction sector and he Malaysian GDP as shown in the chart below. The chart compared the average revenue of 40 Bursa construction companies with the Malaysian GDP.
![[Image: Burss-construction-vs-GDP.png]](https://i.postimg.cc/5ts4QxbC/Burss-construction-vs-GDP.png)
The Malaysian GDP is up trending and you would expect the Bursa construction sector to follow suit
It may be time to hunt for Bursa construction companies to investigate further.
It tracks the sector ROE for the sector over the past 12 years.
You should not be surprised to see the sector ROE declining. In the first half of the decade, the sector mean ROE for many years can be considered to be comparable to that of 2010. But thereafter it began to decline so by 2019 (before the pandemic) it was already lower than that in 2010. Of course, the pandemic caused it to go into negative territory in 2020 and 2021.
I think the Malaysian property market has reached the bottom of its cycle and should recover in the near future. The construction sector should follow suit. Another positive sign is that we expect better GDP growth given the opening of the economy.
There is a close link between the Bursa construction sector and he Malaysian GDP as shown in the chart below. The chart compared the average revenue of 40 Bursa construction companies with the Malaysian GDP.
The Malaysian GDP is up trending and you would expect the Bursa construction sector to follow suit
It may be time to hunt for Bursa construction companies to investigate further.