Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on May 24, 2019

KUALA LUMPUR: Bursa Malaysia’s technology counters fell to multi-month lows yesterday as they continued to suffer the fallout from escalating trade tensions between the US and China.

The Bursa Malaysia Technology Index declined by over 3% again on the second of trading day of this week to a three-month low. In total, it has lost 6.81% since the start of the shortened week on Tuesday versus a 0.22% decline in the benchmark FBM KLCI over the same period.

The biggest decliners on the index by percentage yesterday were Cuscapi Bhd (down 8.33%), Edaran Bhd (down 7.29%) and Prestariang Bhd (down 6.49%). They were followed by Inari Amerton Bhd (down 5.71%) and Mi Technovation Bhd (down 5.63%).

Inari, which still ranks as the biggest tech company on the stock exchange by market capitalisation, fell eight sen to a four-month low of RM1.32, leaving it with a RM4.19 billion market value.

The chipmaker announced that its net profit for the third quarter ended March 31, 2019 (3QFY19) had fallen 31% to RM38.19 million versus RM55.17 million a year ago, due to lower revenue, a change in its product mix and higher depreciation costs.

Revenue for the quarter dropped 21% to RM256.32 million from RM325.83 million previously as there was lower volume loading on a major sensor product, the group said.

“Looking forward, using guidance from the group’s current customer forecasts, the business for (the) first half of FY20 is expected to recover,” it said in a filing with Bursa.

“However, the short-term outlook is clouded by geopolitical events like the ongoing US-China trade war and Brexit. In the event no major fallout happens, the group can look forward to higher volumes for our existing and new products for FY20,” Inari added.

Globetronics Technology Bhd also closed down eight sen or 5.03% at a four-month low of RM1.51 yesterday.

Meanwhile, Prestariang traded at a three-month low of 36 sen after losing 2.5 sen or 6.49%.

On Monday, US President Donald Trump announced that Huawei Technologies Co Ltd was blacklisted, effectively banning all trade of the Chinese telecommunications giant’s products and restricting its access to Google’s Android operating system and other services.

“President Trump appears to have concluded that maintaining a hard line against China is preferable to striking a quick, narrow deal and there appears to be support in Congress across both parties for this policy,” said Nomura Global Markets Research in a note yesterday.

The research house added that more tariffs are therefore likely to be implemented before the end of 2019.

China has called out the US for “typical economic bullying” of Huawei and called for the US to show “sincerity” if it wanted to continue trade talks.

Bloomberg reported that while Beijing is still weighing contingency plans to bail out Huawei and its leaders are calling for dialogue to resolve the dispute, anti-US sentiment is being stoked in the media.

Huawei founder Ren Zhengfei has spoken out, however, against anti-US sentiments, stating that US politicians not the country’s firms should be the focus of criticism. Ren added that he and his family still used Apple products.

Yesterday, Japan’s Panasonic Corp, which initially said that it had stopped shipments of certain components to China, later stated that it continues to supply components to Huawei normally.

This had followed British chip designer ARM’s announcement that it had halted relations with Huawei. The smartphone maker uses ARM blueprints in the design of its processors.

Reuters also reported that the US could be eyeing other Chinese companies to blacklist, including surveillance outfit Hikvision.

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