FSM Webcast > Meaningful Rebound on the Horizon for Malaysia's Technology Sector

Meaningful Rebound on the Horizon for Malaysia's Technology Sector

Jerry Lee, FSM Research Analyst of Fundsupermart.com shares his views on Malaysia's technology sector.

How did Malaysia's technology sector perform?
If you look at the past performance of the local technology sector, after recording a superior return in 2017, it took a hit and tumbled by more than 12% on a YTD basis. There were several reasons that contributed to the underperformance of the technology space such as the strengthening of the Ringgit as well as the escalating trade war tension between US and China.

What's your outlook for the technology sector for the remaining of 2018?
At this juncture, we see plenty of buying opportunities within the technology space and here's why.
According to the Semiconductor Industry Association, the world-wide semiconductor sales have reached a record high level of US$38.72 billion in month of May 2018, which represent a growth rate of 21% on a yoy basis. Given the robust sales growth on the YTD basis, the SIA has upgraded the sales forecast by 6% this year. Hence, given that most of the local technology counters are the E&E exporters and the strong global economy outlook as well as the strong demand for semiconductors, we believe there will be more meaningful recovery for the local technology counters.
Secondly, while everyone is worrying on the global decline in the smartphone sales, the artificial intelligence has emerged as a strong driver for the semiconductors sector. In recent years, we see increasing usage of AI technology across many industries such as healthcare, manufacturing, logistic and so on. Therefore, with the increasing usage of AI technology, it will eventually spur a parallel growth in demand for semiconductors.
Last but certainly not the least, a strong Ringgit will eventually hurt the revenue and earnings of these technology counters but when we move toward the end of the year, we expect the magnitude of the foreign exchange losses for these technology counters is likely to trend lower. Reason being, on the short to mid-term perspective, we don’t expect massive foreign inflow into Malaysia equity and bond market should the US FED continue to tighten their monetary policy. On top of that, for the foreign direct investment in Malaysia, we believe that it is likely to take a pause at least until a greater clarity from the new government, which is expected to take another 3-6 months. So, we believe there will be a short-term pressure on Ringgit, which is a blessing for the local technology counters.
All in all, with the current valuation and prospect for the technology sector, we believe it could be a good buy for investors.

Can you provide a few funds that invest in the technology sector?
For investors who want to ride on the rebound in the local technology space, they can consider funds like InterPac Dynamic Equity Fund and InterPac Dana Safi where both of the funds have 41% and 39% of exposure in local technology space.

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Broadcast Date : 26 July 2018
Video Duration : 00:03:34
Programme : Meaningful Rebound on the Horizon for Malaysia's Technology Sector
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