Malaysia’s once-booming data centre sector is showing signs of strain as shifting global trade policies and market corrections take their toll. What was previously a golden opportunity for construction and property firms has now become a source of volatility, with major players seeing significant share price declines amid tightening US export controls on advanced computing technology.
Investment bank JPMorgan warns that the ripple effects of these restrictions could impact up to two-thirds of Malaysia’s planned four-gigawatt data centre capacity. The bank has downgraded key construction stocks, including Sunway Construction Group and Gamuda, citing overvaluation risks and slowing project tenders. SunCon, in particular, faces heightened vulnerability, with data centre projects making up more than half of its order book.
The downturn isn’t limited to construction firms—property developers tied to data centre projects are also feeling the pinch. Mah Sing Group, Sime Darby Property, and Eco World Development have all seen double-digit share price drops this year. These declines follow a period of explosive growth in 2024, when investors flocked to companies linked to Malaysia’s data centre expansion. However, JPMorgan notes that Gamuda’s diversified portfolio, including rail and renewable energy projects, provides some insulation against the sector’s volatility.
While the long-term outlook for Malaysia’s data centre industry remains uncertain, the immediate challenges highlight the risks of overreliance on a single thematic investment. With US-China tech tensions reshaping global supply chains, companies heavily exposed to data centres may need to recalibrate their strategies to navigate the shifting landscape.