PETALING JAYA: MIDF Research remains positive on the construction sector as the softening in steel bar prices will contribute to an ease in cost pressures, while cement prices remain stable, thus providing a supportive pricing environment for contractors.
“Despite concerns surrounding data centre investments following the artificial intelligence (AI) chip restriction, the Stargate initiative and the DeepSeek developments, we believe the market reaction may have been overdone.
“Malaysia remains a key data centre hub due to its strategic location, abundant resources, and cost advantages, with industry feedback suggesting no major disruptions to upcoming projects.
“As clarity emerges, we anticipate a recovery in construction stocks, supported by strong job flows, mega infrastructure projects, and sustained private sector investments in data centres and other government-related infrastructure projects such as the RTS Link in Johor, the Penang LRT and others,” it added.
The research house top picks for the sector are Gamuda Bhd
, IJM Corp Bhd and Sunway Construction Group Bhd (SunCon).
In the cement space, the brokerage recommends Malayan Cement Bhd as a key beneficiary of continued construction sector expansion.
On data centres, MIDF Research said the recent volatility in Malaysia’s construction sector, particularly in stocks like Gamuda and SunCon, was triggered over concerns over the AI chip restriction implemented by the Biden administration.
This policy restricts United States data centre operators from deploying more than 7% of their processing power in Tier 2 countries like Malaysia and caps graphics processing unit (GPU) usage at 50,000 units per facility, triggering fears that large-scale data centre investments in Malaysia would slow.
These concerns, it said, were compounded by Donald Trump’s Stargate initiative, a US$500bil plan backed by Microsoft and Meta to expand data centres in the United States.
This further shakes market confidence in Malaysia’s role as a global data centre hub.
“However, we believe these fears may be overstated.
“Malaysia remains a prime location for data centres due to its abundant power and water resources, cost advantages, and established infrastructure,” it noted.
