Malaysian construction stocks were downgraded to 'neutral' from 'overweight' at RHB Research Institute Sdn Bhd, blaming higher costs and frustration over a lack of progress on proposed national infrastructure projects including new rail lines.

The next round of stocks re-rating will not take place until the market is more sure about the exact timing for contracts to be awarded, particularly a mass rail extension in Kuala Lumpur, Joshua Ng, an analyst at RHB, wrote in a report today.

Construction companies also face increased earnings risk as oil prices climb, Ng said. -- Bloomberg