Double cover: Tech mania amid global chip shortage + Cash-rich companies on Bursa

Double cover: Tech mania amid global chip shortage + Cash-rich companies on Bursa
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KUALA LUMPUR (Jan 23): The spectacular performance of semiconductor and semiconductor-related stocks was largely overshadowed by the rubber glove mania last year amid the Covid-19 pandemic.

And just when investors are wondering what’s next for a sector rotational play, tech stocks are now charging forward, taking their turn in the limelight.

One huge factor that is fuelling the current rally is the global chip shortage that has caused prices to rise for certain semiconductors, delays in filing orders and automotive firms to halt production.

It was reported that chips used in vehicles were harder to come by because semiconductor manufacturers allocated more capacity to meet soaring demand from consumer electronics makers.

Is there a quick fix to the situation? Will the situation be prolonged?

As it is, the Philadelphia Semiconductor Sector Index, which comprises 30 largest semiconductor giants, is at its all-time high. It has moved up by 500% in five years, from 500 to 3,000. 

Closer to home, the Bursa Malaysia Technology Index also gained 220% within a year, from 25 to 80 points.

Notably, locally listed major outsourced semiconductor assembly and test (OSAT) companies such as Inari Amertron Bhd, Unisem (M) Bhd and Malaysian Pacific Industries Bhd (MPI), as well as automated test equipment (ATE) manufacturers, including ViTrox Corp Bhd and Greatech Technology Bhd, saw their market capitalisation and valuations grow significantly over the last 12 months.

Does the semiconductor rally still have legs? Are tech stocks overvalued? Will we see a tech mania this year similar to the frenzy for glove stocks last year?

Our second cover story looks at how some companies on Bursa are building strong cash buffers in the Covid-19 pandemic. This is quite a feat given the tough economic conditions the business community has had to weather in the past year, with lockdowns enforced in Malaysia and its major trading partners to contain the spread of the virus, bringing activities practically to a standstill.

In our story, we take a look at the top 30 cash-rich companies on Bursa, excluding the financial sector, and how their net cash positions have fared compared to a year ago.

In the accompanying story, we look at which stocks on Bursa, based on their closing share price on Jan 18, 2021, are delivering dividend yields of more than 4%.  

Dividend-yielding stocks could be an option for savers with higher risk tolerance, especially in a low interest rate environment, and we speak to experts on which criteria to look out for when analysing if a high-yielding stock would be a good investment.

Get the full story in this week’s issue of The Edge Malaysia.

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