KUALA LUMPUR, Sept 19 — RHB Investment Bank Bhd (RHB IB) expects the consumer sector to be the biggest beneficiary of the upcoming Budget 2023.

The investment bank said as is usually the case every year, some of the more predictable goodies such as cash handouts, bonuses for civil servants, and income tax relief can be expected, especially in view of the rising cost of living.

"These would further support private consumption in the second half of 2022 to continue driving economic growth, in line with the nation’s transition to endemicity.

"We also expect the government to continue prioritising the B40 segment’s welfare through the provision of subsidies for necessities and monetary assistance,” it said in a research note today.

RHB IB also expects the budget to emphasise automation, technology and sustainability.

"The digitalisation drive could be positive for names like CTOS Digital, GHL Systems and Revenue Group,” it said.

However, the investment bank has low expectations of significant incentives for the property sector, given the government’s announcement of the Keluarga Malaysia Home Ownership Initiative (i-MILIKI) in July.

As for the construction sector, it said the current state of public finances remains tight, considering Malaysia’s total debt-to-gross domestic product ratio of 63.8 per cent as of end-June 2022 (compared to 63.4 per cent at end-Dec 2021).

"Construction may see headlines from some pre-polls pump-priming, but this is likely to be skewed towards smaller contractors. Larger projects could still be announced, but these would require private funding,” it said.

RHB IB said the automotive sector may receive a fillip from incentives to expedite electric vehicle production and adoption, with an outside chance of greater clarity on the forthcoming excise duty reform.

Meanwhile, the investment bank expects Budget 2023 to contain a higher allocation for the healthcare sector, with the bulk of the proceeds channelled towards the nation’s healthcare infrastructure to improve the quality and ensure the affordability of public healthcare services.

It also believes that Budget 2023 will continue to emphasise the energy transition, with more environmental, social and corporate governance-friendly measures being implemented.

Banks are also expected to continue supporting small and medium enterprises (SMEs).

"We believe that Bank Negara Malaysia and banks prefer targeted assistance rather than another blanket moratorium for SMEs,” said RHB IB.

It noted that macroeconomic risks remain centred on the monetary policy trajectory, coupled with an evolving geopolitical environment that continues to give investors pause for thought on the prospects for risk assets.

"The market’s attempt to price in the outlook for 2023 continues to be stymied by limited visibility, leaving investors on the fence, as such, we advocate a core defensive stance, coupled with a trading mentality.

"Overall, we maintain our overweight stance on banks, non-bank financial institutions, oil and gas,

healthcare, basic materials, gaming and technology,” it added. — Bernama