This Southeast Asian country presents opportunities for data centers, according to JPMorgan's bullish outlook.

• JPMorgan identified data centers, electric vehicles, and solar power as sectors that are attracting investment.
• JPMorgan analysts stated in a July 1 note that policy reforms, data center investment, and infrastructure build-out have become significant factors driving Malaysia's growth, in line with their 2024 outlook. However, these developments are progressing at a much faster pace than anticipated.
• Last week, the investment bank changed its stance on Malaysia from "underweight" to "neutral."

JPMorgan has identified Malaysia as an attractive investment opportunity for data centers, with various sectors and ideas to explore, according to recent discussions.

Rajiv Batra, head of Asia-Pacific (ex-Japan/China) equity strategy at JPMorgan, stated on CNBC's "Squawk Box Asia" Wednesday that the story is multi-themed.

""Penang has emerged as a tech hub and Malaysia offers multiple sectors and ideas to play," said Batra."

He added that in addition to electric vehicles, they are also focusing on green energy and are now discussing solar energy.

The investment bank has upgraded Malaysia's rating from "underweight" to "neutral" and increased its target for the Kuala Lumpur Composite Index, indicating that the country is progressing at a much stronger pace than anticipated.

JPMorgan analysts stated in a July 1 note that policy reforms, data center investment, and infrastructure build-out have become significant factors driving Malaysia's growth, in line with their 2024 outlook. However, these developments are progressing at a much faster pace than anticipated.

In Southeast Asia, Malaysia's equity market stands out as a "bright spot" with a 9% year-to-date return, surpassing all other countries in the region.

There are potential challenges, such as subsidy rationalization, external volatilities, and the potential impact of upcoming U.S. elections, that could negatively affect consumer spending.

Southeast Asia's fastest growing data center market is Johor Bahru, which has helped Malaysia become a data center powerhouse, according to DC Byte's 2024 Global Data Centre Index.

Malaysia's proficiency in assembling, testing, and packaging semiconductor chips has made it an appealing destination for companies such as Intel and AMD seeking to expand their operations amidst U.S.-China tensions.

In January, Zafrul Aziz, Malaysia's minister for international trade and industry, stated that the government is inviting numerous EV makers to the country in order to "leverage its position in the semiconductor supply chain."

In Malaysia, tech giants such as Google and Microsoft have committed to spending billions of dollars to enhance cloud and AI technology.