The construction industry is mainly immune to the direct effects of Liberation Day tariffs, which imposed retaliatory duties on more than 180 US trading partners in Asean at rates ranging from 10% to 49%.
However, Hong Leong Investment Bank (HLIB) Research stated that if the extensive restrictions persist, they would increase possible second-order concerns, such as a slowdown in trade-related employment and a possible retraction in data centre contracts.
“The KL Construction Index has fallen by 4.3% since Liberation Day, exacerbating year-to-date performance.
“We think that elevated risk premiums and negative wealth effects necessitate an adjustment to our valuations,” said HLIB Research.
“The on and off nature of tariffs could result in deferment of investment decisions affecting the flow of industrial jobs,” it added.
“We anticipate that data centre contracts could start trickling in from the second quarter of 2025 (2Q25), with awards for larger contract sizes of about RM2 billion per data centre possibly towards the second half, factoring in the evaluation period,” it said.
According to the research firm, tender opportunities have been increasing rapidly this year, undeterred by concerns about global trade and artificial intelligence, DeepSeek.
“Encouragingly, several power infrastructure contracts have materialised this year.
“Tenaga Nasional Bhd’s electricity supply continues to expand with agreements signed totalling 5.9gw, or 26% up from 4.7gw in the previous quarter,” said the research house.
The overall picture appeared to be encouraging, although HLIB Research predicted a reduction in data centre capital investment.
Source: Bernama
