TECH STOCKS SLIP AMID WORRIES

Analysts downgrade stance on sector from ‘neutral’ to ‘slightly bearish’

INVESTORS are selling Malaysian technology stocks on concerns over the semiconductor industry’s outlook, which may get bleaker following the United States’ restrictions on China’s Huawei Technologies Co Ltd.

Analysts are also slightly pessimistic, saying the latest development was harmful to the overall

industry.

With “neutral” to “slightly bearish” stance on the sector, analysts have cut their target prices on some tech stocks.

Reuters reported on Sunday that Alphabet Inc’s Google would stop providing Huawei with access to its proprietary apps and services. But the US Commerce Department on Monday announced a 90-day reprieve, allowing the Chinese company to buy US goods until August 19.

Malaysian Pacific Industries Bhd, which was downgraded from “hold” to “sell”, fell 40 sen, or 4.21 per cent, to RM9.10 yesterday.

Inari Amertron Bhd dropped as much as 11 sen, or 7.33 per cent, before settling at RM1.40 at the close of trading.

The share prices of Globetronics Technology Bhd, Vitrox Corp Bhd and Pentamaster Corp Bhd also fell.

Globetronics dropped as much as 14 sen before settling 5.92 per cent lower at RM1.59.

Vitrox eased to a low of RM6.91 before closing six sen, or 0.85 per cent, lower at RM7.02.

Pentamaster closed 24 sen, or 5.53 per cent, lower at RM4.10 after hitting a low of RM4.05.

MIDF Research head Redza Rahman said the latest development would likely have a negative impact on the tech sector as China was one of Malaysia’s biggest trading partners, while the electrical and electronics sector was one of the biggest contributors to Malaysian exports.

“We still have three months for the US and China to come to an agreement before the ban takes full force.”

Stock market analyst Nazarry Rosli said most semiconductor companies with US interests took a hit because of the negative sentiment.

“The long-term impact on the tech industry depends on the trade war. If it gets worse, the industry will get worse. We can only hope that there will be an amicable solution at the next meeting between US and China.”

Hong Leong Investment Bank (HLIB) said the conflict had created more doubts on global semiconductor sales and capital spending projections.

“The escalation of the conflict is harmful to the tech sector. We reiterate our ‘cautious’ stance (on the tech sector) in the absence of near-term catalysts,” it said.

HLIB said the trade restrictions would also hurt US companies that relied on the Chinese market for growth and profits.