Construction stocks slip further as investors continue to cut exposure to M'sian data centre plays

• The Bursa Malaysia Construction Index, which tracks 50 stocks in the sector, fell to a fresh three-month low of 263.87, before rebounding to close at 277.92 for a 0.32% gain.

KUALA LUMPUR (Jan 17): Malaysian construction stocks fell further on Friday, as investors further cut their exposure to data centre plays, amid lingering fallout from intensifying US controls on advanced chip exports.  

"The current outlook has become uncertain and cloudy, and I think investors will likely want to reduce their positions in the stocks," said Datuk Thomas Yong, the chief executive officer of Fortress Capital Asset Management Sdn Bhd.

Gamuda Bhd’s (KL:GAMUDA) share price closed 0.47% lower at RM4.24, after 101.3 million shares changed hands in the most active trade on the local bourse. Sunway Construction Group Bhd (KL:SUNCON), which has the most data centre-related contracts in its order book, dropped as much as 4.2% during the day before recovering slightly to close 1.4% higher at RM3.63.

The Bursa Malaysia Construction Index, which tracks 50 stocks in the sector, fell to a fresh three-month low of 263.87, before rebounding to close at 277.92 for a 0.32% gain.

"It is difficult to predict when the selling pressure will subside on construction stocks,” said Yong. “Their share prices have risen significantly in the past due to expectations of growth and upcoming projects, so there will be some profit-taking pressure.”

Gamuda is trading at a price-earnings ratio (PER) of 26.3 times, compared with Sunway Construction at 27.6 times, according to AskEdge data. IJM Corporation Bhd (KL:IJM), another construction firm building data centres, dropped more than 3% before recovering to close 1.96% higher at RM2.60. The stock was trading at 15.8 times PER.

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