KUALA LUMPUR (Jan 9): Malaysian construction stocks extended their decline on Thursday, amid wider market selldown sparked by worries of escalation in global trade tensions.
The retreat followed strong rallies of builders last year, which continued into the first week of 2025. “After having a good run, a healthy correction is expected, and any noise will trigger a pullback,” said Danny Wong, who manages assets worth over RM5 billion as the chief executive officer of Areca Capital.
The primary concern on Thursday was news reports on the US planning to restrict sales of artificial intelligence chips, which could impact data centres and related project investments in Malaysia, he noted.
The Bursa Malaysia Construction Index, which tracks 49 stocks in the sector, was the worst performer on Thursday, after dropping more than 3% and losing seven months of gains.
Gamuda Bhd (KL:GAMUDA), the country’s largest builder by market capitalisation, declined 3.85% to RM4.99. IJM Corp Bhd (KL:IJM) lost 4.64% to RM3.08, while Sunway Construction Group Bhd (KL:SUNCON) was down 3.54% to RM4.90.
Still, all three construction majors were near their multi-year highs after the scramble in 2024 by investors seeking exposure to companies building the data centres.
Investors should take advantage of the pullback in construction stocks, said Malacca Securities head of research Loui Low.
“I reckon this is a decent pullback for entry as they still have room to grow” considering the prospective projects from data centres to the Johor-Singapore Special Economic Zone, as well as the Penang Light Rail Transit (LRT), he said.
Both Low and Areca’s Wong said construction stocks could achieve higher valuations, driven by increased project deliveries and potential future contracts, as Malaysia enters a construction boom.
“Valuation can go up higher in years, as they are backed by future contracts,” Wong added.