The rise of AI, political stabilization, foreign investment back into the arms of Malaysian stocks

Various favorable factors converge, $FTSE Bursa Malaysia KLCI Index (.KLSE.GI)$The Malaysian stock market is outperforming the region, and with the return of foreign capital, Malaysian stocks will rise further.

According to Bloomberg data, throughout May, foreign investors made net purchases of 52.9 million US dollars (RM2,369.99 million) of Malaysian stocks, which is the largest return of foreign capital since March 2022.

The AI field is gradually sprouting, and China's political stability has further attracted the attention of foreign investors. In May, Malaysia was the only Southeast Asian country to see capital inflows.

Malaysia has had a lot of good news recently, first $NVIDIA (NVDA.US)$Nvidia built a data center, later $Microsoft (MSFT.US)$Microsoft plans to invest several billion ringgit in Malaysia, making Malaysia the center of the international semiconductor supply chain.

It has been more than a year and a half since the establishment of the Malaysian Solidarity Government and has continued to push forward reforms. It is very popular with investors, which has also improved the prospects of the Malaysian market.

Huang Deming, CEO of Areca Capital, pointed out that the haze of political instability has dissipated. Coupled with rising commodity prices, Malaysia has once again become a target for foreign investors. Furthermore, Prime Minister Anwar also frequently invites major companies to invest in the AI and green energy industries.

“This is a good time for Malaysian stocks that are cheap and have insufficient holdings. ”

Since the beginning of the year, the FTSE Composite Index has risen by more than 10%, while the MSCI ASEAN Index has only climbed about 3%. Analysts expect Malaysian stocks to rise another 7% in the next 12 months, surpassing the peak in December 2020.

According to CIMC Securities, after the rise in utilities and healthcare stocks, foreign investors recently held large amounts of China's technology and transportation stocks.

Highlight niche advantages

“ $UNISEM (5005.BMS)$Unisen and $INARI (0166.BMS)$Innerley Meichang both increased 25% this year. ”

In addition, Malaysia also has many AI-related auxiliary industries, such as $YTLPOWR (6742.BMS)$Yang Zhongli Electric Power and $TENAGA (5347.BMS)$National Energy is a potential beneficiary of the rise of data centers.

Alan Richardson, manager of Samsung Asset Management Fund, also said that Malaysia is gradually highlighting niche advantages in the AI ecosystem. Other potential advantages include low cost and geopolitical stability.

What is certain is that the current rise in the FTSE Composite Index has pushed the capital-benefit ratio valuation to more than 14 times the 5-year average. On the other hand, other regions, such as Vietnam and Indonesia, are still trading below the 5-year average.