Construction index jumps 3.1 per cent

New Straits Times

5 days ago

KUALA LUMPUR: Bursa Malaysia Construction Index jumped more than three per cent following the government's announcement of a RM430 billion development expenditure (DE) under the 13th Malaysia Plan (13MP).
At the close of trading, the Construction Index surged 3.10 per cent or 9.65 points to end at 321.17, up from 311.52 previously.
The strong performance placed the construction sector at the top of the market, outperforming all other sectors.
Financial services followed with a 1.91 per cent gain, while other advancing sectors included technology, which rose 1.05 per cent, property up 0.95 per cent, energy adding 0.17 per cent and real estate investment trusts up 0.17 per cent.
On the downside, telecommunications and media fell 0.80 per cent, plantation dipped 0.33 per cent, consumer products and services declined 0.28 per cent, and utilities slipped 0.27 per cent.
Transportation and logistics dropped 0.3 per cent, while healthcare ended 0.2 per cent lower.
The broader market also saw moderate gains, with the FTSE Bursa Malaysia KLCI climbing 20.10 points, or 1.33 per cent, to settle at 1,533.35, as investors reacted to the long-term economic outlook presented in the 13MP.
Ekovest Bhd emerged as one of the most actively traded construction stocks, with 62.79 million shares changing hands by the close. The counter rose 4.82 per cent, gaining two sen to end at 43.5 sen.
Other notable construction stocks included Gamuda Bhd, which recorded a trading volume of 22.74 million shares, followed by WCT Holdings Bhd with 16.57 million, Econpile Holdings Bhd at 16.07 million, IJM Corporation Bhd with 13.50 million, and Bina Puri Holdings Bhd with 10.43 million shares.
Prime Minister Datuk Seri Anwar Ibrahim tabled the 13MP in Parliament on Thursday, outlining a RM430 billion allocation for development spending between 2026 and 2030, up from RM415 billion under the previous plan.
Key infrastructure initiatives under the 13MP include the continuation of the East Coast Rail Link to strengthen east-west connectivity, and the Gemas–Johor Bahru double-tracking project to improve rail transport in the south.
In Johor Baru, the government will roll out an Electrified Economic Rail Transit system to enhance regional mobility.
Penang's public transport network will also be expanded through the Light Rail Transit Mutiara Line, while the cross-border Rapid Transit System Link is expected to improve connectivity with Singapore.
In East Malaysia, the Pan Borneo Highway and a feasibility study for the proposed Trans-Borneo Railway are expected to enhance inter-state transport infrastructure in Sabah and Sarawak.
The plan also includes upgrades to Penang and Miri airports to support the growth of tourism and logistics.
CIMB Securities said the higher DE is expected to drive renewed momentum in public infrastructure spending starting from the fourth quarter of 2025.
This momentum is likely to accelerate further in 2026 and 2027 ahead of the next general election scheduled for 2028.
"We also anticipate increased DE spending in East Malaysia, where both Sabah and Sarawak are due to call for fresh state elections by 2025 and 2027 respectively," it added.
Affin Hwang Investment Bank Bhd said the DE allocation is a positive catalyst for construction firms, driven by expectations of increased infrastructure spending.
This is especially beneficial for larger contractors with strong balance sheets that are well-positioned to undertake public-private partnership projects such as Gamuda, IJM Corporation Bhd and Sunway Construction Bhd, which typically works in collaboration with its parent company, Sunway.
RHB Investment Bank Bhd said the DE is expected to continue supporting infrastructure growth in the country.
The firm maintained its "Overweight" call on the sector, citing expectations of a stronger pipeline of development projects under the plan.