JPMorgan is bullish on this Southeast Asian nation, cites alternatives in knowledge facilities

Knowledge facilities have been extensively talked about and Malaysia is rising as a lovely funding alternative providing completely different sectors and concepts to play, in keeping with JPMorgan.

“It is a multi-theme story happening,” Rajiv Batra, head of Asia-Pacific (ex-Japan/China) fairness technique at JPMorgan, advised CNBC’s “Squawk Field Asia” Wednesday.

“Knowledge middle is the one which everyone seems to be speaking about. Penang has confirmed themselves as a tech hub general,” mentioned Batra, including that Malaysia provides “a number of sectors and concepts to play.”

“In addition to that, we’re seeing they’re going into the electrical automobiles, they’re going into the inexperienced vitality general. And now they’re even speaking in regards to the solars too,” he added.

The funding financial institution mentioned Malaysia is progressing at a a lot stronger tempo than anticipated and upgraded the nation to “impartial” ranking from “underweight” final week, elevating its goal for the Kuala Lumpur Composite Index.

“Coverage reforms, knowledge middle funding and infrastructure build-out have turn into key tailwinds for Malaysia, in-line with our 2024 outlook, however are progressing at a a lot stronger-than-anticipated tempo,” JPMorgan analysts mentioned in a July 1 notice.

The analysts named Malaysia’s fairness market as “a brilliant spot” in Southeast Asia with roughly 9% return year-to-date — the very best amongst nations within the area.

Nevertheless, they highlighted there might be challenges like “subsidy rationalization, exterior volatilities, and potential affect of upcoming U.S. elections” that would harm client spending.

Malaysia has emerged as a knowledge middle powerhouse, with Johor Bahru named because the quickest rising knowledge middle market inside Southeast Asia in DC Byte’s 2024 International Knowledge Centre Index.

It is usually a hotspot for semiconductor chip companies trying to diversify operations amid U.S.-China tensions. Malaysia’s experience within the meeting, testing and packaging of chips has made it a lovely place for companies like Intel and GlobalFoundries.

Zafrul Aziz, the nation’s minister for worldwide commerce and trade, mentioned in January that the federal government is inviting many EV makers to Malaysia because it desires to “reap the benefits of its place within the semiconductor provide chain.”

Tech giants like Google and Microsoft have pledged to take a position billions of {dollars} in Malaysia to advance cloud and AI infrastructure within the nation.