No respite for tech stocks as Nasdaq confirms correction

No respite for tech stocks as Nasdaq confirms correction
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KUALA LUMPUR (March 9): Share prices of Bursa Malaysia Technology Index constituents including Malaysian Pacific Industries Bhd (MPI), ViTrox Corp Bhd and Unisem (M) Bhd fell among top decliners across the exchange in morning trade today after the US’ tech-laden Nasdaq declined over 2% in overnight trade to record a more than 10% drop since its Feb 12 closing high to confirm a correction.

At 9.04am today, the Technology Index was 3.41% lower, becoming the top percentage decliner among bourse gauges.

At 9.05am, leading decliner MPI’s share price had dropped RM2.40 or 6.88% to RM32.48, Unisem was 45 sen or 6% lower at RM7.05 and ViTrox was down 30 sen or 2.05% at RM14.30.

"What's going to determine the results today is the balance between buying for the reflation trade and the selling of tech [stocks],” Michael McCarthy, the chief markets strategist of CMC Markets, was quoted by Reuters as saying today.

"It's difficult to say what's going to be most influential given the spectacular gains across Europe compared to the big drop in the Nasdaq,” McCarthy said.

Overnight in the US, it was reported that technology-related shares were sold off yesterday in a big downturn that pushed the Nasdaq into a correction and offset stocks that rose on hopes the US$1.9 trillion (RM7.84 trillion) Covid-19 relief bill will spur the US economic recovery.

It was reported that tech stocks are particularly sensitive to rising bond yields because their value rests heavily on earnings in the future, which are discounted more deeply when bond returns go up.

"The Dow hit a record intraday high but the big tech stocks that have led Wall Street to scale successive peaks over the past year fell, with the Nasdaq closing down 2.41%. The Nasdaq is now down 10.6% from its Feb 12 record close or more than a 10% slide the market considers a correction,” Reuters reported.