KUALA LUMPUR (Jan 27): The proxies to artificial intelligence (AI) on Bursa Malaysia are not spared from the global selldown triggered by Chinese AI startup DeepSeek that has prompted investors to rethink the exuberant valuations in the equity markets.

The selling wave on Bursa hit several groups of stocks, ranging from data centre developers such as YTL Power International Bhd (KL:YTLPOWR) and Sime Darby Property Bhd (KL:SIMEPROP), NationGate Holdings Bhd (KL:NATGATE), an original equipment manufacturer for Nvidia, to construction companies like Gamuda Bhd (KL:GAMUDA) and IJM Corp Bhd (KL:IJM).

YTL Power and its parent YTL Corp Bhd (KL:YTL) led the pack, falling to their two-month lows. YTL Power's share price tumbled 10.8% to RM3.22, valuing the counter at RM26.63 billion, and YTL Corp slid nearly 9% to RM1.93, with a market capitalisation of RM21.43 billion.

Both YTL Corp and YTL Power topped the exchange's most actively traded list. Some 60.2 million YTL Corp shares changed hands, making it the most traded stock on Monday, followed by YTL Power with 59.28 million shares traded. YTL Power was the second highest in terms of turnover, with close to RM198 million worth of shares transacted, after Tenaga Nasional Bhd (KL:TENAGA).

YTL Power's journey to setting up data centres equipped with Nvidia chips seems to be getting bumpier.

Shortly after the selldown triggered by concerns that the US might further tightens restrictions on exports of advanced chips, the company on Monday was hit by a fresh round of selling driven by emerging belief that AI models don't always need the latest advanced chips. 

Besides, the company's proposed bonus issue of warrants to raise fresh capital for future capital expenditures also weighed on the stock. The proposed bonus issue of warrants involves the issuance of up to 1.67 billion free warrants on a one-for-five basis, with the exercise price set at RM2.45.

Consequently, YTL Corp, which holds a 54.84% stake in YTL Power, also proposed a similar exercise to raise money for the exercise of YTL Power warrants.  

The proposed cash call did not go down well with the market, which resulted in heavy selling last week. This is mainly because both warrants are not tradable. In general, institutional investors are not permitted to hold unlisted investment instruments in portfolios.

The large volume of warrant conversions would create a share overhang in the coming three years, which is likely to cap both share prices. Furthermore, the warrants will be non-tradable, meaning the derivatives do not carry any value, said analysts, and investors cannot sell them on the open market for profit.

DeepSeek’s latest AI model was like an eye opener showing the world that large language models (LLMs) could be powered by less advanced chips. This has given a jolt to investors who have poured money into chipmakers at high valuations.

Some AI pundits commented that DeepSeek may be a threat to the US' leading position in AI developments.  

At the time of writing on Monday, Nvidia's share price had plummeted 13%, erasing US$465 billion (RM2.04 trillion) of market capitalisation. Reuters described it as the largest drop in market value in US stock-market history.

In the local construction sector, Sunway Construction Group Bhd (KL:SUNCON), which holds the largest number of data centre-related contracts in its order book, saw a 5.51% drop in its share price to RM3.43. Gamuda fell by 3.1% to RM4.06, while IJM Corp shed 6.6% to RM2.41.

In the property sector, Sime Darby Property Bhd (KL:SIMEPROP), which is developing a data centre for lease, saw a 5.4% decrease to RM1.41. Meanwhile, Mah Sing Group Bhd (KL:MAHSING), which has a joint venture with Bridge Data Centres, slipped 4.17% to RM1.38.

Read also:
NationGate hits three-month low as investors weigh China’s AI push
Selling persists, YTL Corp and unit YTL Power down over 5%
YTL Corp, YTL Power shares down in active trade after plan to issue non-tradeable warrants
YTL Corp, YTL Power plan free non-tradeable warrants; exercise prices at discount to market prices