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.
Malaysian semiconductor companies are expected to face near-term earnings pressure due to the recent strengthening of the ringgit against the US dollar, according to TA Securities. The research house estimates that a 1% drop in the US dollar could reduce the earnings of Inari Amertron Bhd by 1.3% and Unisem (M) Bhd by nearly 4%. Despite this, TA Securities maintains a positive outlook on the sector's medium- to long-term prospects.
The firm noted that the ongoing global recovery in demand for semiconductors and rising trade diversion should continue to support Malaysian semiconductor firms. TA Securities kept its ‘overweight’ call on the sector and views the recent market correction as an opportunity for investors to accumulate oversold semiconductor stocks.
The US dollar recently declined by 11% to a three-year low against the ringgit before rebounding sharply. Given that semiconductor sales and costs are largely denominated in the US dollar, currency fluctuations have a significant impact on these firms.
The Bursa Malaysia Technology Index has been volatile this year, gaining 28% by June but losing all gains by the end of August. It remains down 7% year-to-date.
Despite near-term challenges, global semiconductor sales data indicated a strong upward trend. August sales increased 3.5% month-on-month and 21% year-on-year, marking the 10th consecutive month of year-on-year sales growth, according to the Semiconductor Industry Association.
For strategy, TA Securities maintained ‘buy’ calls on Inari, Unisem, Malaysian Pacific Industries Bhd (MPI), and Elsoft Research Bhd. However, the firm cautioned that investors should monitor downside risks, including further US dollar weakness against the ringgit and geopolitical tensions that could impact economic growth and disrupt supply chains.
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