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Construction Sector in Malaysia Experiencing a Boom!

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Construction sector in Malaysia experiencing a boom driven by a surge in data center contracts and government initiatives for artificial intelligence (AI) development – The Edge.

  • A rally in construction stocks has pushed the Bursa Malaysia Construction Index to a six-year high. The index has marked a 37.7% gain year-to-date.

  • Analysts attribute this growth primarily to projects awarded for data centers, increased land transactions and infrastructure expansions like the Penang International Airport, and the Penang Light Rail Transit. Notable companies benefiting from these contracts include Gamuda Bhd and Sunway Construction Group Bhd.

  • Analyst has indicated optimism for continued growth, driven by more job awards and positive investor sentiment.

One example is the property developer, Sime Darby Property Bhd, which is well-positioned to benefit from the influx of technology investment in Malaysia – The Star.

  • The company has a substantial amount of land and a strong financial position, and could see additional upside potential from Google's recent announcement of a US$2 billion investment in Malaysia, which includes RM1.74 billion for its first data center at Sime Darby Property’s Elmina Business Park (EBP) in Selangor.

  • The data center investment is anticipated to increase Sime Darby Property's total asset under management from RM4.4 billion currently to around RM6 billion to RM7 billion by 2026. At that point, the company might be able to produce RM120 million to RM130 million in total recurring operating income.

  • Alongside new data centre, the tech giant will also turn Malaysia into one of its Google Cloud regions.

Meanwhile, withdrawals from the Employees Provident Fund's (EPF) new Account 3 will not affect the retirement fund's investment strategy – CEO Ahmad Zulqarnain Onn.

  • The EPF anticipates withdrawals from Account 3 to reach RM25 billion this year and up to RM5 billion annually thereafter, which is manageable given the fund's RM1.23 trillion in assets. Unlike the unexpected COVID-19 withdrawals, these withdrawals are planned and controlled, allowing fund managers to manage the liquidity.

  • Since Account 3's introduction last month, RM5.52 billion withdrawals from Account 3 and RM8.78 billion transfer from Account 2 to Account 3 have been approved.

REMEMBER!

Being able to save 5% of your salary every month is better than earning 5% return. Having a disciplined savings habit can help improve your financial position quicker (than spending time choosing the best fund manager).


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