29 Management Discussion And Analysis / Strategic Review DAGANG NeXCHANGE BERHAD Integrated Report 2024 Strategic Review OPERATING ENVIRONMENT AND MARKET CONDITIONS FY2024 unfolded against a backdrop of shifting macroeconomic conditions, geopolitical uncertainty and evolving industry demands - all of which shaped the landscape in which the Group operated. While the global economy showed signs of moderate resilience, recovery remained uneven across regions. Inflationary pressures and ongoing policy adjustments continued to affect global economic confidence and spending decisions across markets. Within this broader context, the International Monetary Fund (“IMF”) reported a global gross domestic product (“GDP”) growth of 3.2%, with emerging markets leading the expansion at 4.2%. In Southeast Asia, domestic demand and a revival in tourism supported the region’s resilience. Malaysia recorded a healthy 5.1% growth, providing a stable macroeconomic environment that supported the Group’s domestic operations (Source: Bank Negara Malaysia). Nevertheless, challenges persisted in the broader global landscape. A more cautious investment climate and softening external demand placed pressure on export-oriented sectors. This was particularly evident in the technology space, where Malaysia’s role in the global semiconductor supply chain exposed the Group to wider demand volatility. Geopolitical tensions continued to influence global supply chains and market sentiment. The ongoing United States-China technology rivalry introduced uncertainties around export controls and trade policy (such as new tariffs), while the conflict in the Middle East and the war in Ukraine fuelled volatility in global energy markets. Crude oil prices experienced an early upswing in 2024, which temporarily supported earnings from Ping’s upstream energy activities. However, subsequent price stabilisation tempered the overall impact. These developments highlighted the importance of regional diversification and a balanced asset footprint across our portfolio. Industry-specific trends also evolved rapidly during the year. The semiconductor sector faced cyclical headwinds, though structural drivers such as artificial intelligence (“AI”), smart mobility and data infrastructure continued to support long-term demand. In the digital landscape, the Malaysian government’s initiatives (such as the MyDIGITAL blueprint) and postpandemic recovery sustained momentum in cloud, cybersecurity and AI adoption, particularly in regulated sectors. Meanwhile, global energy transition pressures, including shifts in fiscal regimes, prompted a stronger industry focus on jurisdictional stability and low-carbon positioning. Furthermore, the regulatory landscape saw several significant changes. In Malaysia, updated corporate governance expectations - including mandatory hybrid annual general meetings and increased sustainability disclosures - reinforced the push for greater transparency and stakeholder engagement. On the international front, the announcement of changes to the United Kingdom (“UK”) Energy Profits Levy (“EPL”) prompted reassessments of fiscal outlooks for certain offshore assets. At the same time, the introduction of global sustainability disclosure standards, including International Financial Reporting Standards (“IFRS”) S1 and S2, signalled the beginning of more structured and comparable environmental, social and governance (“ESG”) reporting across markets. In retrospect, FY2024 was marked by complexity, but also by clarity in the form of emerging themes. The year reaffirmed the importance of operational agility, regulatory awareness and strategic diversification. As a whole, these settings are integral to how the Group positions itself for long-term resilience and value creation. FY2024 was a year of recalibration for the Group. As global economic conditions continued to evolve with persistent geopolitical uncertainties, market volatility and an accelerating push for digital and energy transition, DNeX remained focused on building resilience across our Technology, Energy and IT Business Segments. This Management Discussion and Analysis outlines how we navigated the operating environment, executed our strategic priorities, managed risks and positioned ourselves for sustainable, long-term growth.
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