January 2025 Market Outlook
Reflecting on 2024, the global economy and markets have proven their resilience amid various challenges, including restrictive monetary policies and geopolitical tensions. As we look toward 2025, we anticipate a convergence of economic policy changes that will bring both new obstacles and fresh opportunities for investors. Three major factors to watch are Data Centres, Interest Rates and Foreign Direct Investment.
Malaysia Next Frontier – Data Centres
Malaysia is rapidly emerging as a key data centre (DC) hub in the region, particularly in Johor. Johor remains an attractive location for data centres, and has surpassed Klang Valley in terms of IT capacity. The data centre market in Johor experienced exponential growth between 2020 and 2024, at 318MW per annum, recording an aggregate supply of 1,296MW as of the end of 2024, which is 56 times the state’s capacity in 2020. From 2021 to June 2024, a substantial RM90 billion has been invested in DC developments. Major international players like US-based Google, Microsoft, and Equinix, as well as China’s Yondr Group, Bridge Data Centre, Singapore’s Keppel Data Centre, and Singapore Telecommunications Ltd (Singtel), are prominent figures in Malaysia’s DC market.
According to Bextel, a leading DC research firm, Johor boasts 29 DC facilities covering over 2.32 million square feet, with a total capacity of 416MW. Additionally, eight more DCs are under construction. Johor is currently the largest DC market in Malaysia and ranks 8th in the Asia-Pacific region.
Table 1: Upcoming Data Centres in Johor
Company/Investor | Location | Total Power (MW) | Size (Arce) (‘000) | Estimated Launch | Investment (RM bil) |
YTL Power | Kulai | 500 | 275 | 2024 | 19.2 |
Yondr group | Sedenak Tech Park | 300 | 72.8 | 2024 | NA |
Air Trunk | Johor Bahru | 150 | 24.7 | 2024 | NA |
MN Holdings, Shanghai DC | Sedenak Tech Park | 120 | 20 | 2024 | 2.68 |
GDS Holdings | Kempas | 64 | 242 | 2025 | 14.4 |
Equinix | NusaJaya | NA | 0.48 | 2024 | 0.19 |
K2 | Sedenak Tech Park | 200 | 60 | NA | NA |
Microsoft Azure | Kulai | NA | 123 | NA | 9.5 |
ST Telemedia Global Data Centres | Nusa Cemerlang | 120 | NA | 2025 | NA |
Princeton PDG | Sedenak Tech Park | 150 | NA | 2025 | 6.69 |
Singtel-Telekom Malaysia | Iskandar Puteri | 64 | 42.75 | 2026 | 1.15 |
Source: knight Frank, Bextel
Table 2: Investments by technology giants into Malaysia between December 2023 to October 2024
Source: Various source
Table 3: Distribution of data centres’ IT capacity in Malaysia
Region/State | Existing Supply | Future Supply (Under Construction) | ||
No of Data Centres | Estimated IT Capacity (MW) | No of Data Centres | Estimated IT Capacity (MW) | |
Johor | 12 | 396.9 | 28 | 898.7 |
Klang Valley | 37 | 107.0 | 28 | 378.5 |
Penang | 3 | 0.4 | NA | NA |
Sarawak | 2 | 0.6 | 2 | 17.8 |
Negeri Sembilan | 0 | NA | 2 | 16.0 |
Kedah | 0 | NA | 1 | 2.0 |
Total | 54 | 504.9 | 61 | 1,313.0 |
Source: Knight Frank
According to Knight Frank SEA’s 5th Data Centre Opportunity Index report, Malaysia successfully attracted RM141.72 billion in digital investments during the first 10 months of 2024, three times the RM46.2 billion in approved digital investments during the same period in 2023. These investments are projected to generate over 40,000 new job opportunities. As of end 2024, there are a total of 54 operational data centres in Malaysia, offering live IT capacity of 504.8 MW. Key focus remains on Klang Valley and Johor, with Sarawak, Negeri Sembilan, and Kedah emerging as upcoming data centre locations in the country.
Chart 1: Aggregate Supply of data centres in SEA-5 Cities
Source: Knight Frank Malaysia Research
In an “Inflationary Growth” regime, investors should continue to put their cash to work
This aligns with the message conveyed by the Federal Reserve (FED) during its final meeting of 2024, where it revised its projections to account for stronger economic growth and persistent inflation. The central bank plans to continue adjusting interest rates toward a more neutral level in the coming year, but at a slower pace to account for ongoing uncertainties. Notably, it now anticipates a 50 basis point rate cut in the year ahead.
In this context, declining interest rates driven by falling nominal rates and persistent inflation could reduce the appeal of holding cash. Investors can consider allocating funds to real assets, such as real estate fund, which serve as effective hedges against inflation. Moreover, these assets provide diversification benefits, particularly during times of market volatility and increased geopolitical tensions. The diagram below shows that interest rates have begun to decline, following the Fed’s rate cuts.
Chart 2: Interest Rate has started to decline with FED rate cuts.
Source: Federal Reserve, US
Malaysia in Foreign Direct Investment Upcycle
Following a prolonged slowdown in the latter half of the 2010s, Malaysia has seen a significant resurgence in Foreign Direct Investment (FDI) inflows since 2021. This recovery has sparked renewed interest from financial asset investors, as reflected in the rerating of the benchmark KLCI and the strengthening of the ringgit last year. Approved FDI remains high in 2024, with the real estate sector leading the charge, contributing a total of RM463.9 billion from 2014 to 2023.
Source: world bank
As we navigate these major macro trends in 2025 and beyond, it’s essential for investors to concentrate on the fundamentals by investing in assets that provide potentially strong returns and consistent income payout,such as the QJBCC fund, which is well-positioned to overcome challenges and seize long-term opportunities.
Disclaimer
The information contained herein does not constitute an offer, invitation or solicitation to invest in Asia Vision Capital (“AVC”)). This article has been reviewed and endorsed by the Chief Investment Officer (CIO) of AVC. This article has not been reviewed by The Securities Commission Malaysia (SC). No part of this document may be circulated or reproduced without prior permission of AVC. This is not a collective investment scheme / unit trust fund. Any investment product or service offered by AVC is not obligations of, deposits in or guaranteed by AVC. Past performance is not necessarily indicative of future returns. Investments are subject to investment risks, including the possible loss of the principal amount invested. Investors should note that the value of the investment may rise as well as decline. If investors are in any doubt about any feature or nature of the investment, they should consult AVC to obtain further information including on the fees and charges involved before investing or seek other professional advice for their specific investment needs or financial situations. Whilst we have taken all reasonable care to ensure that the information contained in this publication is accurate, it does not guarantee the accuracy or completeness of this publication. Any information, opinion and views contained herein are subject to change without notice. We have not given any consideration to and have not made any investigation on your investment objectives, financial situation or your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any persons acting on such information and advice.
