Tech stocks hold off further losses

Technology-based counters such as Inari Amertron Bhd (up two sen to RM1.50), Globetronics Technology Bhd (up seven sen to RM1.59), Malaysian Pacific Industries Bhd (up 30 sen to RM10.14), and KESM Industries Bhd (up 11 sen to RM8.36) all gained at the day

PETALING JAYA: After the recent huge falls in their market value hurt by Apple’s note to its investors, technology stocks held off further declines even as another smartphone maker, Samsung, guided for a sharply weaker fourth-quarter earnings report.

The firmer equity market sentiment following a higher close on the US stock markets overnight also helped the case for these battered tech stocks.

Technology-based counters such as INARI AMERTRON BHD (up two sen to RM1.50), Globetronics Technology Bhd (up seven sen to RM1.59), Malaysian Pacific Industries Bhd (up 30 sen to RM10.14), and KESM INDUSTRIES BHD (up 11 sen to RM8.36) all gained at the day’s close.

It is to be noted that they have seen heavy losses in recent times and yesterday’s performance was an exception.

Samsung Electronics said yesterday that its earnings for its fourth financial quarter likely decreased sharply on lackluster demand in its memory chip business and growing competition in the smartphone segment which it competes in, reports said.

The South Korean mobile phone company surprised the market yesterday with an estimated 29% drop in quarterly profits on weak chip demand, Reuters reported.

According to wire reports, Samsung also said profit would remain subdued in the first quarter due to difficult conditions in memory chips, but the market is likely to improve in the second half of the year when new smartphones are launched.

The weaker guidance by Samsung could also signal slowing demand for smartphones in the bigger picture as the market becomes saturated.

New technology advancements in new successive smartphone generation launches have anecdotally also possessed less obvious incremental features when compared to the previous generation.

When Apple released its note of caution to investors just late last week, its CEO Tim Cook reportedly told the press that there was a possibility that the trade war between the US and China might have affected its sales in China.

He then said that the slowing of China’s economy had been a major contributory factor to its weakened sales in the North Asian country.

Commenting on this matter, Stephen Innes, the head of trading for Asia Pacific at OANDA, said in his note that a bit of the feel-good factor has temporarily abated for local equity markets after Samsung Electronics’ quarterly sales missed the mark.

“This is another casualty of the US-China tensions, which have triggered a drop in demand for memory chips and flat mobile device sales in China,” Innes said.

“When Apple sounded the alarm bells for the last quarter results, there was some thought that the drop in China sales was an anti-Apple backlash due to escalating US-China tensions.

“But these Samsung results are quite damning, suggesting that there is a broader-based retail and manufacturer slowdown afoot,” he added.


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