Tech stocks down on fear over robust ringgit

Sentiment on local bourse affected by Samsung profit miss

PETALING JAYA: Technology stocks on Bursa Malaysia took a beating following concerns that a stronger ringgit may erode their bottom line.

Sentiment on the local bourse was also affected by South Korean giant Samsung Electronics’ weaker-than-expected financial performance in the last quarter of 2017.

“Traders needed a solid excuse to take some money off the table and they got one with Samsung as the trigger,” a dealer from a local research brokerage said.

Trading on the local bourse yesterday saw technology stocks such as KESM Industries Bhd falling by 18 sen to RM21.30, Inari Amertron Bhd declining by 17 sen to RM3.48, Malaysian Pacific Industries Bhd (MPI) giving up 10 sen to RM12.30 and Globetronics Technology Bhd erasing 10 sen to RM6.87.

AmInvestment Bank Research said in a note just before Christmas that it expected Inari Amertron, MPI and Unisem (M) Bhd’s net profit to decrease by 3% to 5% for every 1% depreciation of the US dollar against the ringgit.

“The US dollar-ringgit (exchange) rate is no longer a plus. Our exchange rate assumptions are 4.30 per US dollar for 2017 and RM4.12 per US dollar for 2018, a projected depreciation of nearly 4%.

“Note that the expected US dollar depreciation has already been accounted for in our earnings forecasts,” the research house said.

Meanwhile, the ringgit strengthened slightly in yesterday’s trade as at late evening press time to 4.0048 (-0.0047) to the US dollar on the continued ascent of oil prices.

Currency dealers said that some profit-taking was seen in the US dollar-ringgit currency pair initially on Monday and Tuesday and in the earlier part of yesterday.

“There has been intense focus on the key psychological 4.00 mark and the pair has backed off a bit from this key level in the past two sessions. It needs stronger momentum to convincingly breach this level,” a dealer said.

On the equity market front, the FBM KLCI continued to give back some of its gains achieved at the beginning of this year.

The key benchmark index lost 4.03 points or 0.22% to 1,822.92 at the end of the trading day.

Some 5.75 billion shares worth RM3.78bil changed hands.

Losers outnumbered gainers 1.48 times, with 386 counters remaining unchanged and 361 counters untraded. Component stocks that weighed on the index included Hong Leong Bank Bhd that fell 26 sen to RM17.34, Genting Malaysia Bhd losing 19 sen to RM5.57 and Hong Leong Financial Group Bhd declining 18 sen to RM17.76.

Gainers were Nestle (M) Bhd that rose 20 sen to RM103.20 and AMMB Holdings Bhd gaining eight sen to RM4.56.