Construction stocks gain on revival of projects

13 Feb 2020 / 20:20 H.

PETALING JAYA: Construction stocks on Bursa Malaysia saw a surge in investor interest today, in anticipation of the stimulus package that will be announced next month, as well as progress seen on mega infrastructure projects.

Today, the construction index closed 7.02 points or 3.44% higher at the day’s high of 211.17 points. The index saw a total of 207.38 million shares traded, accounting for 7.6% of the total turnover of 2.73 billion shares on the market.

Construction stocks also were among the top gainers on Bursa.

AME Elite Consortium Bhd ended 18 sen or 10.29% higher at RM1.93, with 4.05 million shares done, while Gamuda Bhd closed 11 sen or 2.79% higher at RM4.05 on 7.8 million shares done.

Gabungan AQRS Bhd, Sunway Construction Group Bhd and Muhibbah Engineering (M) Bhd also gained 9.9%, 5.26% and 4.8% to RM1.11, RM2 and RM1.96, respectively.

During Bank Negara Malaysia’s fourth-quarter economic performance briefing on Wednesday, it was revealed that the construction sector saw a recovery due to strong growth in civil engineering and the turnaround of the residential sub-sector, which in turn had attracted a higher level of private investment.

Anticipation over projects such as the high speed rail (HSR) between Malaysia and Singapore, Bandar Malaysia and the East Coast Rail Link (ECRL) further drove trading interest.

Fitch Macro Solutions Research also said it was likely that the HSR project would be restarted “in the short term”, as the economic benefits were too great to ignore.

The report noted that the HSR could be brought back as part of the government’s larger plan to prop up the local economy that has been battered by the US-China trade war as well as the novel coronavirus (Covid-19) outbreak this year.

The ECRL, which was relaunched last year, is now 15% complete, with the project expected to be fully completed by mid-2026 and operational by early 2027.

Meanwhile, earlier in the week, the government said it is in the midst of preparing a stimulus package due to the coronavirus outbreak. The details of the package are expected to be announced at the end of the month or in early March.

For the construction sector, AmResearch believes the focus will be on small-scale shovel-ready projects such as roads, pavements, bridges, schools and public amenities that will benefit mainly the smallish and unlisted construction outfits.

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