CEO Morning Brief

Malaysian Tech Stocks Rally as Investors Bet Fed Will Pause Policy Rate Hike

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Publish date: Wed, 14 Jun 2023, 08:40 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (June 13): Malaysia’s technology-related counters were in the driver’s seat on Tuesday (June 13), benefiting from foreign buying and gains in the tech-heavy US Nasdaq.

Bursa Malaysia's Technology Index rose 3.5% to 62.68, against the 0.4% decline in the benchmark FBM KLCI to 1,380.61 points.

At the closing bell on Monday, the Nasdaq had gained 1.53% to close at 13,461.92 points, as traders were betting that the US Federal Reserve (Fed) will pause its rate hike during the Federal Open Market Committee meeting this week, Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng told The Edge.

Investors on the home front, undoubtedly, cheered the US index’s milestone, with Malaysian Pacific Industries Bhd gaining RM1.64 or 6% to RM28.98, the top gainer in absolute terms on Tuesday.

This was followed by Greatech Technology Bhd (up 28 sen or 6.8% to RM4.40), Pentamaster Corp Bhd (up 23 sen or 4.82% to RM5), and UWC Bhd (up 23 sen or 7.6% to RM3.26).

It is worth noting is that Inari Amertron Bhd was among the most active stocks on Bursa, with 32.84 million shares exchanged, as its share price gained 16 sen or 6.3% to RM2.70.

“The technology stock rally in Bursa was basically reacting to the Nasdaq’s performance and expectations that the Fed will ease interest rate hikes. Tech stocks are usually highly geared and as such more sensitive to changes in policy rates. But the rally that we have seen mostly has to do with investor sentiment, rather than fundamentals,” he explained.

Thong further said hardware manufactures involved in the technology sector, such as semiconductor chip manufacturers, may not be riding the sudden surge of interest in tech stocks. However, technology companies involved in providing services and solutions are set to see their share prices going up.

He added that most investors expect US inflation data to tame for the month of May, giving the likelihood that the Fed will pause its rate hike.

Rakuten Trade in a note on Tuesday said the KLCI remained at a two-week low, as 1,390 points was seen as a strong resistance level.

“For today, we reckon the index to hover within the 1,380-1,390 range, and if there is a decisive breakout from 1,390, we may see 1,400 as the next target,” the research outfit added.

Source: TheEdge - 14 Jun 2023

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