Tech stocks tumble on Bursa Malaysia

The Philippines, Malaysia and Thailand are all posting their fastest economic growth rates in years, while Singapore is poised to keep up that streak in data released on Thursday. All four economies are projected to slow into the final three months of the year while retaining impressive 2017 growth figures and keeping pace into next year, according to Bloomberg survey data.

PETALING JAYA: Technology stocks on Bursa Malaysia fell after several companies within the wider supply chain that operate overseas indicated some weakness in demand and saw their shares falling.

Tech stocks fell locally and in Europe despite them having staged a strong intraday recovery in Tuesday’s trade on the tech-focused US Nasdaq Composite Index.

“The jury is out as to whether the bears have gained total control of the entire market due to recent market weakness that is showing up on negative portfolio performance, but the wider economy looks fine and it doesn’t appear on the surface that there are any threats to global growth nor new weakness in any economy,” said a dealer.

“The speculation of a 10-year market reset that has happened quite consistently in the past cycles sounds too easy and convenient now and may have been already reflected on to current equity prices. Investors may wake up one day realising that they panicked for no apparent reason,” he added.

Wire reports said that the Nasdaq Composite Index had climbed out of correction territory in late trading on Tuesday’s closing, after declining 0.4% following an earlier rout which was recorded as having fell as much as 8.3% in the month-to-date period for its worst month since November 2008 when the index fell 10.8%.

Nasdaq Composite Index futures, however, indicated a negative open at press time’s trading.

For reference, the Dow Jones Industrial Average staged a 500-point recovery at one point in Tuesday’s trading but still closed the day lower by 125.98 points or 0.50% to 25,191.43.

At the close yesterday, Globetronics Technology Bhd declined 7.73% or 18 sen to RM2.15, Inari Amertron Bhd dropped 16 sen or 7.24% to RM2.05, while KESM Industries Bhd lost 54 sen or 4.69% to RM10.98.

The wider market was negative, with the FBM KLCI falling 7.56 points or 0.45% to 1,690.04 and with a negative market breadth of 620 losers (72%) against 245 gainers (28%), while 348 counters remained unchanged.

Sentiment locally was also affected by the performance of tech stocks on the European bourses.

One particular stock which has influence on Globetronics - Austria-based AMS AG - has given a weak forecast for its fourth quarter.

Wire reports said that AMS, which is Apple’s chip supplier and listed in Switzerland, has seen its shares losing some 25% of its share value despite having won deals with other smartphone makers.

According to a Reuters report, AMS’ shares were at a 20-month low on Tuesday after concerns arose whether the company could achieve its 2019 revenue target of US$2.7bil due to some signs of weakening chip demand.

JP Morgan Research’s analysts were reported by business wires as saying that although AMS said its third-quarter sales had jumped 57% to US$479.6mil compared to the same period last year, its guidance for the fourth-quarter earnings before interest and taxes margin had missed estimates.

“If this is the last cut in estimates, then it could be time to buy post the decline,” Bloomberg quoted the analysts as saying.

Another analyst who covers Globetronics and who was present at the AMS conference call on Tuesday opined that AMS’s 2018 fourth-quarter revenue guidance is decent, but margin guidance is below the consensus.

“The lower margin guidance is leading market speculation that Globetronics may see more aggressive erosion in average selling prices. The caveat is that AMS did not specify why it was less upbeat on margin guidance, as it could be due to yield issues at its own end,” the analyst said.

Meanwhile, Inari fell yesterday pursuant to weak results from Broadcom’s wafer supplier, Win Semi, that is based in Taiwan.

Win Semi had reportedly posted an 11% quarter-on-quarter drop in revenue due to excess inventories in the smartphone market and it expects this inventory adjustment to continue in the fourth quarter of this year.

Inari is related to Broadcom as the former provides electronic manufacturing services to the latter. An analyst said he was not too sure if Inari’s selldown was justified.

“Win Semi supplies wafers to Broadcom across most of its divisions, but all the film bulk acoustic resonator filters (FBar) - in which Inari has exposure to - by Broadcom are done inhouse and not by Win Semi,” the analyst said. So, I am not sure how is Inari related to this Win Semi issue (non-FBar filters of Broadcom). From what we have gathered, Broadcom makes up 10%-15% of Win Semi’s business, but then again, only in the non-FBar filter business,” he added.