Middle East Tensions a Key Swing Factor for Malaysia Tech, EMS Sector — Market Talk

Geopolitical tensions in the Middle East are a key swing factor for Malaysia's technology and electronics manufacturing services sector, with limited near-term impact but rising downside risks if disruptions persist, Affin Hwang IB analysts Kevin Low and Ong Tze Hern say in a note. A prolonged conflict could weigh on spending by major cloud companies and increase cost pressures, they say. AI demand remains strong but concentrated in areas such as wafer fabrication equipment, optical interconnects and testing, while consumer and automotive segments lag, they add. Affin Hwang maintains a neutral rating on Malaysia's technology and electronics manufacturing services sector and stays selective, favoring direct AI beneficiaries with pricing power and strong orderbook visibility. It pegs THMY, Vitrox, Kelington as its top picks and Inari Amertron as a liquid large-cap proxy. (yingxian.wong@wsj.com)