KUALA LUMPUR (July 18): Semiconductor and chip-related stocks on Bursa Malaysia retreated on Thursday, following Wall Street's decline, as the semiconductor index lost over US$500 billion (RM2.33 trillion) after reports of potential US export curbs on advanced semiconductor technology to China.

The Bursa Malaysia Technology Index, which tracks 48 stocks in the sector, slipped by 2.23 points or 2.81% to hit an intraday low of 77.00. While it recovered slightly to close at 77.82, it still ended the day down by 1.78% or 1.41 points. In contrast, the benchmark index of FBM KLCI, rose 0.02% to finish at 1,633.81.

Malaysian Pacific Industries Bhd (KL:MPI) led the top decliners in terms of value on the local bourse, with its share price falling as much as RM2.24 or 5.55% to RM38.14. The stock pared some losses to close at RM39.18 — still down RM1.20 or 2.97% — giving it a market capitalisation of RM8.22 billion. About 441,800 shares changed hands.

Nevertheless, MPI’s share price, which hit a two-year high of RM41.02 on June 12, has risen over 39% since the start of this year. Analysts have assigned five "buy", one "hold", and two "sell" calls to MPI, with a 12-month target price of RM43.18, according to Bloomberg data.

Dufu Technology Corp Bhd (KL:DUFU), among the top 20 losers on Thursday, slipped as much as 13 sen or 5.16% to RM2.39, before closing at RM2.40, valuing it at RM1.31 billion. It saw 5.05 million shares done.

Pentamaster Corp Bhd (KL:PENTA) saw its share price decline by 3.23% to an intraday low of RM5.09, before recovering to close at RM5.15 — still down 11 sen or 2.09% — translating to a market value of RM3.67 billion.

Vitrox Corp Bhd (KL:VITROX) slipped 20 sen or 4.6% to an intraday low of RM4.16, before closing at RM4.25, down 11 sen or 2.52%, giving it a market capitalisation of RM8.04 billion. Frontken Corp Bhd (KL:FRONTKN) decreased 10 sen or 2.22% to close at RM4.40, valuing it at RM6.95 billion.

Year-to-date, the share prices of Dufu, Pentamaster, Vitrox and Frontken have risen over 28%, 12%, 18% and 37% respectively.

“We expect today’s [Thursday] profit taking [on technology stocks] is a knee-jerk reaction to the overnight [Wall Street news]. Longer-term [prospects] still positive,” said Apex Securities Bhd head of research Kenneth Leong who is bullish on the sector.

He said the technology stocks continue to thrive, buoyed by the global recovery in semiconductor sales and advancements in artificial intelligence. Meanwhile, restrictions imposed by the US on exporting advanced semiconductor technology to China are anticipated to favor local tech firms, benefitting countries like Malaysia in the Asean region through trade diversions, Leong said.

TA Investment Management executive director and chief investment officer Choo Swee Kee said the US technology sector had experienced an exceptional run for several years, with a particularly strong performance in 2023, which contributed to the recent downturn. "It is probably about time to take a breather and the magnitude of the loss, although it may seem large on a daily basis, is actually only a small pullback compared to the gains for the past few years. Our local technology stock are affected by the short-term sentiment.

"Over a longer horizon, Malaysia technology [stocks] may even benefit from more relocation of production facilities from China,” he added.