Tradeview Capital portfolio manager Ng Tzyy Loon says the market is in a risk-off mode.
PETALING JAYA: The technology stock sell-off on Bursa Malaysia has continued for more than a month, even as companies reported stronger revenue in the latest earnings season.
The outlook also appears muted and analysts are not pinning hopes for a rebound in the immediate term.
The Technology Index of Bursa Malaysia yesterday hit the lowest level since Feb 6 this year, wiping out the entire gain made during the rally between April and mid-June.
Share prices of all top five technology stocks by market capitalisation have fallen by double-digits from their year-to-date peaks.
Inari Amertron Bhd
saw its share price tumbling by 24% since its year-to-date peak in July, while MyEG Services Bhd and Malaysian Pacific Industries Bhd were down by 20.5% and 31.7% from respective peaks.
Share prices of Frontken Corp Bhd and Greatech Technology Bhd declined by 23.6% and 23.2%, respectively.
Kevin Khaw Khai Sheng, research analyst at iFAST Capital, said technology stocks are under pressure because they are “less spotlighted” by institutional investors.
He said most of the fund flows from institutional players have gone into large-cap sectors such as financials, utilities or construction, which are poised to benefit from the infrastructure play.
“In the meantime, most Malaysian technology players are not direct beneficiaries of these infrastructure or artificial intelligence (AI) themes, which are currently the buzz.
“Secondly, the global poster boy Nvidia’s results overnight have dampened sentiment further.
“This has led to a sell-off in the market, especially in technology counters, as investors are beginning to worry that we are nearing the end of the AI euphoria.”
Meanwhile, Tradeview Capital portfolio manager Ng Tzyy Loon told StarBiz the market is in a risk-off mode, a continuation from the sell-down earlier this month amid the global equities rout.
“Investors see it as a wake-up call and try to rebalance their portfolio to be more defensive.
“It’s like a prisoner’s dilemma, investors try to sell (shares) earlier regardless of the earnings results, unless it exceeds expectation with a substantial margin.
“A (tech stock) rebound in the near term appears quite difficult,” he said.
Looking into the near term, Khaw believes the lingering recessionary fears in the United States could continue to weigh on the local technology sector.
“Additionally, the upcoming results of local technology players are likely to be less surprising.
“Given the current market conditions, it would be prudent to wait for clearer signals or catalysts that could support a sustained recovery in the technology sector,” he added.
