KUALA LUMPUR (Feb 4): While Facebook parent company Meta Platforms Inc's historic share price drop on Thursday (Feb 3) triggered widespread selling on Wall Street, the spillover effect of the selldown was relatively muted on Bursa Malaysia's Technology index.

Bursa Malaysia's Technology index, which fell as much as 0.5% during the bourse's afternoon break on Friday (Feb 4), saw the loss halved to 0.26% or 0.21 point for the index to settle at 81.49 at market close. The local benchmark index FBM KLCI, meanwhile, slipped 0.19% or 2.97 points to close at 1,522.76.

On Thursday, Meta dived 26.39% to settle at US$237.76 — its biggest one-day drop ever since its Wall Street debut in 2012, with US$252 billion (about RM1.06 trillion) erased from Meta's market value in a day — the biggest single-day wipeout ever seen for any US company. At US$237.76, Meta was valued at US$647.17 billion at market close.

The historic plunge, which dragged the US tech-laden Nasdaq Composite down 3.74% to 13,878.82 in overnight trade — its worst day since September 2020 — came after the company reported a rare profit decline due to a sharp rise in expenses, shaky ad revenue growth, competition from TikTok and fewer daily US users on its flagship platform.

A weaker-than-expected revenue growth outlook also weighs on the stock's performance.

Market observers said Meta meltdown's spillover effect on local tech stocks has been rather muted because their businesses are generally different from Meta's, which primarily makes money by selling advertising space on its various social media platforms.

"Our tech deals with hardware such as semiconductors and this segment are expected to see robust demand in the short to medium term given the prevalence of digital devices and upcoming electric vehicles (EVs)," said MIDF's head of research Imran Yassin Md Yusof when contacted.

Rakuten Trade Sdn Bhd vice-president of equity research Thong Pak Leng concurred, adding that local tech stocks were not badly affected because of their bright outlook amid the semiconductor industry's growth.

Prior to Meta's selldown, Bursa's tech-related stocks had been selling targets as investors started rejigging their portfolios to price in the likelihood of more than one interest rate hike by the US Federal Reserve and other central banks in the next 12 months, as inflation reared its ugly head.

MIDF Research, which kept its "positive" rating on the local tech sector in a note on Thursday, said that that was an overreaction to fear of a higher interest rate environment and not due to expectations of lower global semiconductor sales after two years of robust demand.

It said the fortunes of the Malaysian tech sector are highly correlated with global demand for semiconductors, and that the arrival of 5G technology, increasing smartphone shipments, the emergence of digital solutions in businesses and a growing EV market will continue to propel the positive outlook for semiconductor players throughout 2022.

Its top pick for the local tech sector is Inari Amertron Bhd (buy, target price [TP]: RM4.55), given the group's exposure to growing radio frequency contents in 5G smartphone usage and adoption.

"We also like MY EG Services Bhd (buy, TP: RM1.27), as it continues placing aggressive moves to ride the emergence of the digital solution wave in businesses such as the automated driving test and training system (e-testing), Covid-19 breathalysers and cross-selling of travel insurance," MIDF added.