KUALA LUMPUR (Jan 21): Data centre-related stocks and proxies to artificial intelligence (AI) on Bursa Malaysia rebounded on Tuesday, driven by expectations of gradual approach to tariff policies by the new Donald Trump’s US administration.
Trump's future policies are expected to be less aggressive compared to his previous term, with the possibility of reversing some of the restrictions imposed by Joe Biden, said Rakuten Trade head of research Kenny Yee.
“Going forward, I believe Trump may take a softer approach towards China,” he told The Edge.
Meanwhile, private investor and seasoned market watcher Ian Yoong Kah Yin said: "The data centre theme in the short run has run its course and this bounce can be attributed to sell-side analysts feeling less negative”.
According to various news reports, Trump’s economic team has been deliberating a strategy to gradually increase tariffs over time, aimed at boosting negotiating leverage while minimising the risk of a sudden inflation surge.
Sunway Construction Group Bhd (KL:SUNCON), which boasts the largest number of data centre-related contracts in its order book, surged as much as 36 sen or 10.3% to a high of RM3.86. The counter, which emerged as the seventh biggest gainer, closed up 19 sen or 5.43% to RM3.69, giving it a market capitalisation of RM4.51 billion.
Similarly, other construction players which benefitted from data centres also saw gains. Gamuda Bhd (KL:GAMUDA) inched up 0.92% to RM4.38, while IJM Corp Bhd (KL:IJM) climbed 5.32% to RM2.77 at the market close.
“We believe valuations [for the construction stocks] are reasonable given the current construction upcycle, however stock picking would be recommended given the lack of clarity over the new chips ruling at this juncture. Key risk is if a selldown persists due to concerns, a reversion to mean PER [price-earnings ratio] valuation could see about 18% downside,” said Affin Hwang Investment in its note.
According to AskEdge data, Sunway Construction is trading at a trailing PER of 27 times, similar to Gamuda’s 26.8 times, but higher than IJM’s 16.3 times.
Over at the AI proxies, YTL Power International Bhd (KL:YTLPOWR), which is setting up data centres equipped with Nvidia Corp’s latest chips, advanced 3.08% to RM4.02. Telekom Malaysia Bhd (KL:TM) and TIME dotCom Bhd (KL:TIMECOM), both of which operate data centre businesses, saw their share prices increase by 2.32% and 3%, respectively.
Sime Darby Property, which is developing a data centre for lease, gained 6.04% to RM1.58, while Mah Sing Group Bhd, which has a joint venture with Bridge Data Centre, rose 7.97% to RM1.49.