KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
The AI stock rally is facing scrutiny, but for some investors in Asia, the recent market downturn presents a buying opportunity. Despite the region’s tech stocks experiencing their steepest two-day drop ever, confidence in AI’s long-term potential remains strong among money managers.
Key Highlights:
Attractive Tech Giants: Taiwan Semiconductor Manufacturing Co (TSMC), Samsung Electronics Co, and SK Hynix Inc continue to be favored by investors, who see the recent dip as a chance to maintain or even expand their positions in these AI-driven tech leaders.
Investment Outlook: William Yuen, Investment Director at Invesco Hong Kong Ltd, noted that the recent price drop has made these stocks more attractive, suggesting that his firm may add to their positions if further sell-offs occur.
AI Trade at a Crossroads: The ongoing debate centers on whether the AI trade has peaked or if it’s merely at a pause. Analysts are questioning whether the industry’s lofty expectations will be met, especially given the substantial investments made.
Resilience of Asian Tech: Despite the recent rout, Asia’s tech sector remains a formidable force. The combined market value of TSMC, Samsung, and SK Hynix has grown to US$1.2 trillion, up from US$312 billion a decade ago, reflecting their significant influence in the global market.
Earnings Projections: Analysts have raised earnings estimates for key Asian chip stocks, contrasting with a more cautious outlook in the U.S. Morgan Stanley recently reaffirmed TSMC as its top pick, highlighting the company's strong position during a semiconductor downcycle.
Positive Q2 Results: Both TSMC and Samsung reported better-than-expected second-quarter earnings, with TSMC's margin guidance hinting at possible price increases for its leading-edge chips. These firms, along with SK Hynix, are projected to see earnings growth of 26% to 55% next year, significantly outpacing the MSCI Asia Pacific Index’s average of 12%.
Valuation Appeal: The recent market pullback has made tech shares more affordable, with the forward price-to-earnings ratio of the Bloomberg Asia Pacific Semiconductors Index dropping below its 10-year average, enhancing their investment appeal.
Cautious Optimism: Despite the optimism, investors are hedging their bets. Demand for protection against further declines in shares of TSMC and Samsung has surged, with volatility metrics indicating increased caution.
Outlook: As the AI sector navigates this period of volatility, investors are balancing optimism with caution, carefully mapping out their next moves in a market still ripe with potential.
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