JPMorgan is positive about this Southeast Asian country, citing prospects in data centers
Data centers have been widely discussed, and Malaysia is emerging as an appealing investment opportunity with a variety of sectors and concepts to consider, according to JPMorgan.
"The data center is what everyone is talking about. Penang has established itself as a tech powerhouse," said Batra, adding that Malaysia provides "various sectors and concepts to play."
Aside from that, we can see that they are investing in electric vehicles and green energy in general. "And now they're talking about solars," he continued.
The investment bank stated that Malaysia is growing at a considerably faster rate than projected and upgraded the country to "neutral" from "underweight" last week, lifting its target for the Kuala Lumpur Composite Index.
"Policy reforms, data center investment and infrastructure build-out have become key tailwinds for Malaysia, in-line with our 2024 outlook, but are progressing at a much stronger-than-anticipated pace," according to a July 1 note from JPMorgan.
The experts referred to Malaysia's equities market as "a bright spot" in Southeast Asia, with a year-to-date return of around 9%, the highest among the region's countries.
However, they noted that there could be hurdles such as "subsidy rationalization, external volatilities, and the potential impact of upcoming U.S. elections" that could reduce consumer spending.
Malaysia has emerged as a data center powerhouse, with Johor Bahru being rated the fastest expanding data center market in Southeast Asia by DC Byte's 2024 Global Data Centre Index.
It is also a popular destination for semiconductor chip companies wishing to diversify their operations in the midst of tensions between the United States and China. Malaysia's prowess in chip assembly, testing, and packaging has attracted corporations such as Intel and GlobalFoundries.
Zafrul Aziz, the country's minister for international trade and industry, stated in January that the government is encouraging many EV manufacturers to Malaysia in order to "take advantage of its position in the semiconductor supply chain."
Google and Microsoft have vowed to invest billions of dollars in Malaysia to enhance the country's cloud and AI infrastructure.
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