Trump’s Huawei reversal buoys tech stocks on Bursa

PETALING JAYA: Technology stocks on Bursa received a shot in the arm today after US President Donald Trump agreed to reverse the sanction against Huawei after a meeting with President Xi Jinping last Saturday.

Technology stocks such as Malaysian Industries Bhd (MPI), Greatech Technology Bhd and Pentamaster Corp Bhd were among the top winners today, with MPI emerging as the third top gainer.

MPI urged 6.51% to close at RM9.82 with 146,600 shares done while Pentamaster jumped 3.82% to close at RM2.99 with 3.15 million shares traded. ACE Market-listed Greatech saw its rise 15.46% to close at RM1.12 with 41.84 million shares done. It was also among the top active stocks today.

Besides Greatech, technology stocks that were on the top active list today included MyEG Services Bhd, Datasonic Group Bhd, Amertron Bhd, Pre-stariang Bhd and Vsolar Group Bhd, which gained 2.7%, 9.73%, 3.75%, 10.98% and 5.3%, respectively.

The technology index opened higher at 32.76 points today and rose to an intra-day high of 33.18. It closed 3.22% stronger at 33.00 points against a 0.69% gain in the FBM KLCI to 1,683.62 points.

Hong Leong Investment Bank (HLIB) Research, which maintained its “neutral” rating on the technology sector, said the latest development is a win-win scenario and a silver lining amid dull outlooks for global semiconductor sales and capital spending.

“We cheer this development as this sanction relief will normalise the global semiconductor supply chain. As the largest telecommunication equipment vendor globally and second largest smartphone (19% in 1Q19) supplier, Huawei is a huge buyer of US technologies, be it chip, software or patents. US com-panies assessed that this restriction may impact their initial earnings forecasts up to 20%,” it said in its report today.

It said the truce between the US and shows that is not self-sufficient yet, as it relies on the US for leading-edge technologies while US companies are relying on market for growth and profitability.

Separately, HLIB Research said Unisem (M) Bhd’s decision to shut its facility in Batam, Indonesia, is a another positive for the sector but warned that it may entail provisions for layoffs and impairments.

HLIB Research is cautiously optimistic and remains selective on technology stocks. It upgraded Frontken Corp Bhd to a “buy” from “hold”, with a higher target price of RM1.67. It expects Frontken to experience multi-year growth ahead on a sustainable global semiconductor market outlook, robust fab investment, leading-edge technology, oil and gas recovery, and strong balance sheet. The stock rose 5.22% to close at RM1.41 today.

Source: The Sun Daily

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