This article first appeared in The Edge Financial Daily on October 26, 2018

KUALA LUMPUR: After the fall on chipmakers’ share prices in the past two days, the technology bulls are expected to emerge picking up bargains on Bursa Malaysia given that some US tech giants, such as Microsoft Corp and Tesla Inc, have reported better-than-expected quarterly earnings.

Companies like Microsoft’s earnings figures would help ease the earlier concerns on the tech sector’s outlook.

“I believe that all the selldown is overdone. I’m anticipating some short-term rebound,” UOB Kay Hian Malaysia research head Vincent Khoo told The Edge Financial Daily yesterday.

In the intermediate term, Khoo opined that the tech sector will continue to be one of the most promising sectors in providing growth.

“The tech side continues to be driven by the growth coming from the Internet of things (IoT), the proliferation of the automotive applications, Industrialisation 4.0... All this combined, of course, will lead to a further rise in the semiconductor demand,” Khoo added.

Semiconductor companies headed south on Bursa earlier this week after a slew of disappointing earnings numbers revealed by some of the US semiconductor groups that served as the industry’s bellwether.

“I believe that these counters [tech] should see a recovery in today’s market. Among some of these counters include Inari Amertron Bhd, MI Equipment Holdings Bhd and Frontken Corp Bhd,” said Hong Leong Investment Bank head of retail research Loui Low yesterday.

DBS Vickers analyst Toh Woo Kim, on the other hand, noted that there could be some relief rebound for the technology stocks today, but he doubts that the rebound would be sustainable.

Toh explained that a cyclical downturn should take at least two quarters for inventory to normalise, stressing that the risks of the ongoing US-China trade war still lingers.

Bloomberg yesterday reported strong results from Microsoft Corp, Tesla Inc, Twitter Inc and Xilinx Inc are helping to salve wounds after tech stocks led the Nasdaq 100 Stock Index to its biggest rout in seven years.

The newswire added that the next test comes after the close when heavyweights Amazon, Alphabet Inc and Intel Corp all report earnings.

Yesterday, tech-related counters on Bursa were in a sea of red, clearly the reaction of the weak guidance by the major tech companies, especially in the US.

“The drop in technology stocks is mainly due to the weak guidance from major semiconductor companies such as ST Micro and Texas Instrument Inc,” said Toh, adding that the market is worried about a cyclical downturn in the semiconductor sector.

The Technology Index on Bursa shed 3.65% to 34.55 points yesterday, making it the worst performing index across the board.