Tech index bucks market trend, national semiconductor strategy attracts RM63bil in investments
This may be due to Prime Minister Datuk Seri Anwar Ibrahim's announcement yesterday that the National Semiconductor Strategy (NSS), launched in May 2024, has attracted RM63 billion in investments, comprising RM58 billion in foreign direct investments and RM5.2 billion in domestic direct investments.
"Malaysia's transition from a back-end assembly base to a design-to-packaging semiconductor hub remains a work in progress.
"However, we are encouraged to see that the NSS is gaining investor traction, institutional support, and regional momentum. With RM63 billion in committed investments, an increase in local champions, and stronger ASEAN alignment, Malaysia is positioning itself as a neutral, indispensable node in the global chip supply chain,' it added.
CIMB affirmed that this is one of the key advantages in ensuring Malaysia remains an attractive destination for semiconductor manufacturing globally.
At lunch break, Vitrox shares went up 20 sen to RM3.99, Infomina was 11 sen better at RM1.07 and SMRT was 6.5 sen higher at 90.5 sen. - Bernama Trading ideas: MMAG, Keyfield, KAB, Rimbunan Sawit, Jentayu, AYS, Country Heights, Metronic, Nestle, ViTrox, Oriental Interest, KIP REIT, Luxchem, Betamek
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Malay Mail
2 hours ago
- Malay Mail
Anwar to broker ceasefire talks between Thailand and Cambodia in Putrajaya today
PUTRAJAYA, July 28 — A meeting between the leaders of Thailand and Cambodia is expected to be held here today to discuss a ceasefire between the two countries, said Prime Minister Datuk Seri Anwar Ibrahim. He said the negotiation will be held here at 3pm. 'They (government representatives of Thailand and Cambodia) have asked me to try and negotiate a peace settlement, so we are hosting it tomorrow at 3pm here. 'So, I'm discussing the parameters, the conditions but what is important is immediate ceasefire,' he said at a 'Majlis Ilmu Madani' here last night. Anwar said he is expected to chair the negotiation between the representatives of the two countries including the conditions submitted by both parties. Anwar said the discussion between the two leaders came about after US President Donald Trump urged them to find a solution to the crisis. Apart from that, he understands China also contacted both parties to cease the conflict. He also said that a team from Malaysia and maybe some from neighbouring countries are set to monitor the discussion to ensure it is executed well. 'So, within our means, we try our best and Alhamdulillah, we are given that confidence and respect and they are of course our close friends, our neighbours, and we work together. 'And I hope this can work. We have to work again to ensure the parameter is aligned. The Foreign Minister and the Ministry of Foreign Affairs are working throughout the night to make sure everything is clear, because it's not easy, you know, when shooting and fighting are going on. 'So although it's not as bad as many other countries, we have to put a stop because I've always taken pride in the fact that Asean is still the most peaceful region in the world and fastest growing economy in the world,' he said. Earlier, it was reported that the Thai government had confirmed it would attend a regional peace consultation in Malaysia on Monday to discuss the escalating border conflict with Cambodia. Thai Government spokesperson Jirayu Huangsap said the purpose of the talk is to listen to proposals that may lead to informed decisions and ultimately restore peace. — Bernama
The Sun
4 hours ago
- The Sun
RM100 aid short-term spending booster but not market mover: Economists
PETALING JAYA: Prime Minister Datuk Seri Anwar Ibrahim's announcement of a one‑off RM100 cash handout has lifted sentiment in consumer‑related stocks, but economists caution that the impact on actual spending and equity performance may be fleeting, with deeper structural challenges still weighing on the economy. The initiative, worth RM2 billion, is designed to provide relief to households and channel spending into local goods and services. However, views among analysts and economists are mixed – some highlight modest gains for low‑income groups and small businesses, while others warn the measure may do little to shift broader market fundamentals. Center for Market Education chief executive Dr Carmelo Ferlito was blunt in his assessment, describing the handout as neither transformative for household consumption patterns nor meaningful for equity markets. 'While the measure is costly at the aggregate level, it is not a needle‑mover at the micro level,' he told SunBiz. 'I struggle to see how RM100 can affect consumption patterns in any sensible way. Economically, it hardly has any logic behind it and appears to have more of a political flavour.' Ferlito also raised concerns over the potential inflationary effects of injecting cash into the economy, particularly if such policies become frequent. 'Monetary injections are the real cause of inflation, a permanent and generalised increase in prices due to the quantity of money growing faster than economic output,' he said, adding that such measures risk masking structural issues in household income and consumer demand. From a sectoral perspective, Dr Ida Yasin, economist at Universiti Putra Malaysia, said the RM100 payment is more likely to generate a temporary boost for retailers and wholesalers rather than driving sustained gains in the stock market. 'This voucher is to boost demand for goods and services in Malaysia, not so much the demand for stocks,' she said. 'Retail and wholesale demand could rise temporarily, especially in essentials like food and household goods, but most stock market movements depend on business fundamentals.' Ida stressed that the handout's impact would likely fade after its expiry in December, underscoring the short‑term nature of the initiative. 'It benefits sellers, wholesalers and producers, from vegetables to chicken, but the up‑and‑down movements in the stock market are quite normal and not directly tied to such measures,' she said. In contrast, Prof Geoffrey Williams, economist and founder of Williams Business Consultancy, sees value in the handout for low‑income households, noting its multiplier effect on domestic consumption. 'RM100 does not sound like much, but it is a 6% boost for someone on minimum wage of RM1,700. For a family of four adults in the B40 group, that's about a 6–7% rise in monthly income,' he explained. Williams estimated the RM2 billion programme could generate RM6 billion in consumption through multiplier effects, providing a small but notable stimulus to economic growth in the second half of the year. 'This will particularly help SMEs in local communities. It won't harm the fiscal deficit because it's funded by subsidy rationalisation savings,' he said. Williams also suggested the initiative could act as a pilot for a more ambitious social welfare reform. 'If this evolved into a monthly universal basic income, it could be a game‑changer for social policy. Universality reduces costs and complexity, and future versions could be made more progressive,' he added. Despite the initial rally in consumer‑linked counters on Bursa Malaysia, analysts caution that sentiment‑driven gains may not be sustainable without underlying earnings growth. Ferlito pointed to external headwinds, including global political tensions and slower economic momentum, as key drivers of investor caution. 'What emerges here is the concern about the economy slowing down due to international tensions, both political and economic,' he said, warning against overestimating the handout's role in market performance. Ida echoed this, noting that investors should watch core consumption data, such as household spending trends within GDP, to gauge any lasting effects. 'Most of the time, it depends on fundamentals rather than short‑term cash injections,' she said. With the cash handout set to conclude by year‑end, attention now turns to whether Malaysia will adopt similar measures in Budget 2026. Williams believes the government should study the current initiative's outcomes to guide future policy design. 'The most important thing is to learn lessons about the impact so that Malaysia can move to a regular monthly payment. Hopefully this can be announced in Budget 2026,' he said. For now, economists agree that while the RM100 handout provides short‑term relief and a modest consumption boost, it does little to address structural income gaps or long‑term growth prospects for consumer stocks. As markets digest the announcement, the focus will likely shift back to corporate earnings, inflation trends and global economic conditions heading into 2026.
The Star
4 hours ago
- The Star
‘Muted, uneven' recovery for semicon industry
PETALING JAYA: Local semiconductor players continue to navigate a period of heightened uncertainty as a convergence of tariff and trade uncertainty, supply chain dynamics and foreign-exchange (forex) volatility continue to cloud the outlook for the sector. Fortress Capital Asset Management Sdn Bhd chief executive officer Thomas Yong said the industry is likely to experience a period of 'muted and uneven recovery' in the next two to three quarters. In particular, factory utilisation rates in segments tied to consumer electronics may remain muted, and earnings for the second quarter of 2025 (2Q25) is expected to be 'relatively stagnant on a sequential basis'. 'The market would remain volatile, reacting sharply to news related to US-China trade policies, tariff deadlines, and macroeconomic data prints. This period will test investor patience,' he told StarBiz. Yong added that there is a bifurcation in demand in the chip industry, where the artificial intelligence (AI) and data centre markets are 'booming' while the recovery in consumer electronics like smartphones and personal computers remains 'tepid and fragile'. He opined that in such a market Malaysian semiconductor companies should adopt a dual-pronged approach to their capital allocation. 'Players must simultaneously modernise their core, established businesses while selectively and strategically invest in the future growth engines outlined by the National Semiconductor Strategy. 'Take our local outsourced semiconductor assembly and test (OSAT) industry as an example. 'The actionable strategy for local OSAT players is to prioritise capital expenditure (capex) towards acquiring and mastering the capabilities for advanced chip packaging, that is, 2.5D and 3D packaging, fan-out wafer-level packaging, and system-in-package integration,' Yong said. In such a way, companies can position themselves to capture high-margin, high-volume business directly from the world's leading fabless AI chip designers. Fortress Capital's Yong said local players are facing 'significant' margin compression. Notably, a combination of lower-than-optimal production run rate, rising operational costs, including higher electricity tariffs and increased labour expenses driven by a fierce talent war, is squeezing profitability. 'This is compounded by currency effects, as a strengthening ringgit against the US dollar can temper the earnings of export-oriented firms,' he said. Nonetheless, UOB Kay Hian wealth advisor's head of investment research Mohd Sedek Jantan said the uncertainty surrounding US trade policy still stands out as the foremost risk to growth for the domestic semiconductor space. Last week, blue chip semiconductor company Vitrox Corp Bhd was downgraded by analysts following the company's second-quarter earnings announcement. 'Sell' calls for the automated test equipment (ATE) company now outweigh the 'buy' and 'hold' ratings. Hong Leong Investment Bank (HLIB) Research downgraded its call for ViTrox to a 'sell' from a 'hold' with an unchanged target price of RM2.65, derived based on price-to-earnings (PE) multiple of 34 times of the financial year 2026 (FY26) earnings per share. The research house said forex volatility, higher reciprocal tariffs from the United States, and component shortages could weigh on ViTrox's near-term margins. HLIB Research said since ViTrox's 1Q25 results, its share price has surged by 40% amid a strong rebound in sentiment for the technology sector, and that the company's current valuation at 48.5 times FY26 PE 'appears stretched', considering 'lingering demand risks from US tariff uncertainties'. Mohd Sedek is of the view that the risks in Malaysia's semiconductor sector are not yet fully priced in. While certain market and policy concerns have been reflected in valuations, several emerging and persistent risks – particularly related to trade policy, regulatory developments, and supply chain dynamics – remain underappreciated by investors, he noted. Mohd Sedek said operationally, while margin pressures from higher labour levies and escalating selling, general and administrative costs persist – particularly for OSAT and ATE players – valuations have adjusted. 'OSATs are currently trading around one standard deviation below their five-year average, with ATEs closer to two standard deviations below. 'This suggests that some risks have been recognised by the market, yet not all fully accounted for – especially considering the complex global and policy environment,' he said. Mohd Sedek cautioned that potential US legislative changes, such as the proposed One Big Beautiful Bill Act, could introduce further compliance burdens for semiconductor firms, particularly around supply chain transparency and technology transfer. He added that supply chain risks, particularly stemming from the US Section 232 investigations into semiconductors and critical minerals, also warrant attention. 'Possible tariffs or trade restrictions could disrupt Malaysia's access to vital inputs like rare earths, which are heavily sourced from China, as well as critical minerals supplied via regional partners such as Indonesia and Vietnam,' Mohd Sedek said. On top of country-specific reciprocal tariffs, the Trump administration has signalled since April that a special tariff rate will be applied to sectors like semiconductors. The United States is currently weighing on the tariff rate for the sector, pending the outcome of its ongoing Section 232 'national security' investigation. Competitive pressures also remain a structural challenge for the local chip sector. Mohd Sedek says Malaysia's 13% share of the global chip packaging market faces growing competition from Vietnam, India, and China – markets benefitting from aggressive expansion strategies and, in some cases, state support. This is also echoed by Yong that intensifying regional competition 'cannot be ignored'. 'Malaysia is not the sole beneficiary of global supply chain diversification. 'Vietnam, in particular, is aggressively courting foreign direct investment with attractive tax incentives and a national chip strategy of its own. Thailand also remains a formidable competitor, especially in the automotive semiconductor space. Complacency is a luxury we cannot afford,' Yong said. Mohd Sedek shared its base case projects a sector earnings contraction of about 2.7% in 2025, underscoring a challenging environment marked by slowing demand, regulatory hurdles, and macroeconomic uncertainties. Despite these near term challenges, experts say the long-term upside potential of the sector is 'compelling'. Yong said recovery is expected to broaden and accelerate into 2026 as inventories normalise and new investment cycles begin. He opined that the 'most significant tailwind' is the structural, multi-decade shift to de-risk global technology supply chains away from a single point of geographic concentration. He stated that Malaysia's 50-year track record, its well-established ecosystem, skilled workforce, and valued geopolitical neutrality make it a prime destination for 'China+1' and 'friend-shoring' strategies by American, European, and even Chinese firms seeking a stable, high-capability manufacturing base. 'This is not a cyclical trend that will fade; it is a fundamental realignment of global capital flows that will benefit Malaysia for years to come,' he said. Yong also believes that the country can capture the AI 'spillover' effect in that while Malaysia may not be designing the next-generation graphic processing units from scratch, the immense complexity of AI systems however, requires massive investment in what happens after the silicon wafer is fabricated: advanced packaging, highly sophisticated testing, and the manufacturing of the automated equipment that performs these critical tasks. 'Arguably, Malaysia already has the foundation necessary to capture such spillover,' he said. Mohd Sedek also echoed Yong's sentiment, noting that the structural drivers of digitalisation, 5G deployment, AI adoption, and data centre expansion are expected to reinforce Putrajaya's role within the global semiconductor supply chain. 'Infrastructure-led growth and regional mega-projects create meaningful opportunities for firms directly engaged in these emerging ecosystems,' he said. According to Mohd Sedek, technology remains a core investment theme for 2H25, and investors can focus on companies with strong exposure to high-growth segments like AI, 5G, and data centre components. He highlighted the importance of prioritising firms with sound forex hedging strategies and diversified revenue streams. 'To mitigate cyclicality risks, investors could pair semiconductor exposure with defensive sectors, while also have a long-term strategic view through anchor investments on long-term technology megatrends – recognising the sector's critical role in global digitalisation and supply chain realignment,' Mohd Sedek said.
