Malaysia builder rally hots up as pump-priming signs appear

Kuala Lumpur

A RALLY in Malaysian builders is gathering pace in the wake of more contract wins and a revival in mega infrastructure projects in the country.

Kerjaya Prospek Group, one of Malaysia's biggest contractors, said on Friday it won its first job of 2021, sending its shares to a 20-month high this week.

TCS Group Holdings said that same day it secured its maiden infrastructure job linked to an expressway project. A gauge of 51 builders is up 16 per cent from a Feb 3 low, trouncing the FTSE Bursa Malaysia KLCI Index.

Record-low interest rates and signs of government pump-priming has brought relief to the industry hit by the global pandemic and political turmoil from a change in government last year.

The administration surprised analysts earlier this month when it said work on phase three of the Mass Rapid Transit (MRT3) project will start in the second half of 2021, sooner than expected.

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Details of another rail project costing RM50 billion (S$16.3 billion) have also been firmed up.

Malaysia has set aside a record RM69 billion for development expenditure in its 2021 Budget.

Beneficiaries from the MRT3 project that is now estimated to cost RM32.9 billion and span a longer 50 kilometres include Gamuda, IJM, Kimlun and Malaysian Resources, Lum Joe Shen, an analyst at Kenanga Research, said on Wednesday.

Construction companies' shares had been laggards because of overhangs including the political uncertainty and looming general elections, said a April 2 report by Kenanga Research. The sector should be able to sustain its upward trajectory, albeit in a "choppy fashion", it added. BLOOMBERG