Malaysia’s tech sector expected to benefit from heightening US-China stand-off
25 Oct 2022
Public Investment Bank Bhd (PIVB) maintained its “overweight” stance on the technology sector, as it sees more inflows of investments into the Asean region, with Malaysia standing to benefit significantly from the heightening US-China stand-off.
PIVB said that investors should relook at technology stocks with strong fundamentals in the long term, given the attractive risk-reward benefits.
Malaysia stands out in the region, it said in a research note on Tuesday (Oct 25).
“We believe there will be positive spillover effects from the relocation of industries from China and the US into this region — in order to minimise future risks arising from increased US-China tensions.
“Malaysia is among the leading countries in terms of investments in the semiconductor, telecommunications and technology industries, as it has a favourable ecosystem, including talent, infrastructure, and a business-friendly environment,” the investment bank explained.
Malaysia’s outsourced services assembly and test and automated test equipment players could benefit from the trade diversion from the US and China, PIVB said, adding that the ringgit’s current weakness is also attractive to foreign investors.
“Malaysia’s semiconductor industry, which takes up 13% of global chip assembly and testing market share, is set to benefit from the recently passed US Chips and Science Act (US$52.7 billion or RM249.56 billion in federal subsidies allocated to support chip manufacturing) in the long term, as more assembly and testing jobs are needed to cater for the new state-of-the-art chip fabrication plants with process technology of seven nanometres and below,” the investment bank added.