M’sian tech sector to benefit from growing US-China tensions: PIVB

M’sian tech sector to benefit from growing US-China tensions: PIVB

Bank expects positive spillover effects due to relocation of industries from the rival countries to Asean region

KUALA LUMPUR – Public Investment Bank Bhd (PIVB) is maintaining 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 growing US-China standoff.

PIVB said that investors should take another look 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 today.

“We believe there will be positive spillover effects (from) the relocation of industries from China and the US to this region in order to minimise future risks arising from increased US-China tensions.

“Malaysia is among the leading countries in terms of investments for the semiconductor, telecommunications and technology industries as it has a favourable ecosystem, including talent, infrastructure, and a business-friendly environment,” it explained.

Malaysia’s outsourced services assembly and test and automated test equipment players could benefit from trade diversion from the US and China, PIVB said, adding that the ringgit’s current weakness is also attractive for 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 / RM250 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 seven nanometres and below,” it added. (US$1=RM4.74)

– Bernama, October 25, 2022

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