Malaysia stocks ride high as AI building boom fuels longest rally in 13 years

Southeast Asia’s top performing equities market of 2024 has defied the odds to capitalise on a wave of investment in data centres

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People look at trading boards at a private stock market gallery in Kuala Lumpur. Malaysia’s benchmark KLCI is hovering near three-and-a-half-year highs. Photo: Reuters

Published: 3:14pm, 18 Jul 2024

Malaysian equities are on a tear led by builders and suppliers on the back of an AI-driven data centre boom, putting a long-overlooked market back on the radar of global investors.

Malaysia’s benchmark KLCI is hovering near three-and-a-half-year highs and up five quarters in a row, its longest streak in 13 years. A year-to-date gain of 12 per cent is by far the biggest in Southeast Asia.

Builder Gamuda and utility conglomerate YTL Power have doubled their stock prices in less than a year. Electricity utility Tenaga Nasional’s shares are up 45 per cent since December, and foreign money managers are turning buyers in a bet that the market has much further to run.

A relatively steady currency, a period of stability in government, and a trend for global companies to diversify manufacturing set-ups beyond China offer further tailwinds.

Analysts see builders, power suppliers and tech companies gaining most from foreign investment into the Southeast Asian country.

Semiconductor giant Nvidia is among the major technology companies planning data centre projects in Malaysia. Photo: Reuters

“I think Malaysia is definitely a sweet spot at the moment because we offer water, power and the connectivity is there,” said Ernest Chew, Asean portfolio manager at BNP Paribas Asset Management in Kuala Lumpur, who has been buying Malaysian stocks.