KUALA LUMPUR (Jan 28): MIDF Research has recommended that investors adopt a more defensive strategy, citing anticipated bouts of heightened market volatility and uncertainty amid new US policies and geopolitical situations.

In a note on Tuesday, the research house highlighted that sectors traditionally deemed defensive — such as banking, real estate investment trusts (REITs), utilities, healthcare and consumer staples — tend to offer consistent dividends and stable earnings regardless of broader market fluctuations.  

Such sectors, MIDF said, provide a degree of resilience against downside risks while also presenting opportunities for potential price appreciation, especially in the context of undervaluation.

Furthermore, MIDF pointed to recent trends in the US market, suggesting that value and cyclical stocks may attract renewed investor interest.  

This aligns with expectation that the inherent stability and attractive dividend yields in these sectors could serve as a buffer against the volatility currently gripping global markets.

Nonetheless, MIDF believes there will be continued demand for artificial intelligence (AI)-focused data centres (DCs), despite recent disruptions stemming from US regulatory measures.  

The research house noted that while former president Joe Biden’s administration imposed restrictions on AI chip exports, particularly targeting high-performance chips like Nvidia’s GB200 GPUs, not all DCs require these cutting-edge technologies.  

The research house said lower-powered yet still highly capable AI chips, which fall outside the scope of the Export Control Classification Number (ECCN) 3A090.a, remain viable alternatives for AI-driven workloads. 

MIDF posited that this distinction could offer a mitigating factor for investors concerned about the potential fallout from the US’ AI chip restrictions, thus presenting a strategic opportunity in the AI DC sector.