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Bloomberg: Fledging AI sector, political stability send biggest foreign inflows into Malaysian stocks since 2022

Publish date: Thu, 30 May 2024, 07:11 PM

KUALA LUMPUR, May 30 — Malaysia has reportedly emerged as a beacon of foreign investment in South-east Asia this month, setting itself apart with a burgeoning artificial intelligence (AI) sector and sustained political stability.

Business news outlet Bloomberg reported that foreign investors poured US$502.9 million (RM2.37 billion) into Malaysian shares on a net basis in May, marking the country’s most significant monthly inflow since March 2022.

“The government’s tenure past the one-and-a-half-year mark is also a welcome change after a rapid turnover of leaders, while efforts to carry out reforms help improve the outlook for the local market,” the report said.

The report underscores Malaysia’s ascension as a pivotal player in AI within the region, leveraging its status as a global chip supply chain hub, while tech behemoths funnel billions into the nation's infrastructure.

This bullish sentiment has propelled Malaysian equities to outperform regional counterparts, with the resurgence of foreign funds indicating potential for further growth.

Danny Wong, the chief executive of local investment management firm Areca Capital Sdn Bhd, attributed Malaysia’s renewed allure to diminished political uncertainty and a surge in commodity prices.

Wong commended Prime Minister Datuk Seri Anwar Ibrahim for fostering an environment conducive to increased investments in AI and green energy.

“This means good times for under-owned and cheap Malaysian stocks,” he was quoted saying.

Nirgunan Tiruchelvam, an analyst at regional investment analysis and advisory firm Aletheia Capital, concurred, asserting that local stocks stand to gain further as foreign sentiment rebounds, buoyed by political stability and AI investments.

The Bloomberg report observed that the FTSE Bursa Malaysia KLCI Index has surged over 10 per cent this year, in stark contrast to the nearly 3 per cent dip in the MSCI Asean gauge.

In a recent note, CIMB Securities Sdn Bhd highlighted a surge in foreign investments in technology and transportation shares, noting Malaysia’s diverse array of AI-related stocks compared to regional peers.

It highlighted that utility giant YTL Power International Bhd and energy producer Tenaga Nasional Bhd would stand to benefit from the growth of Asean data centres.

Consulting firm Kearney projected that Malaysia could seize around US$115 billion of the US$1 trillion potential boost to South-east Asia’s economy by 2030 through AI adoption.

Earlier today, Google commited US$2 billion to Malaysia, including the establishment of its first data centre and Google Cloud initiative in the region, joining Microsoft Corp and Nvidia Corp in supporting Malaysia’s AI ambitions.

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