Can tech weather the sell-off?

DESPITE the decent earnings posted by Malaysian-listed technology counters, the sector has not been spared a sell-off this week, following the global bond sell-off.

The FBM KLCI’s tech index slid by almost 10% over the past week, although it enjoyed a mild recovery on Thursday.

The recovery in the US markets has been led by companies like Dell, which delivered a very strong artificial intelligence (AI)-infrastructure update, with investors treating its order numbers as evidence that the AI server boom is still accelerating.

Similarly, despite the sell-off among Malaysia-listed tech companies, the proof will be in the pudding for these companies, and that proof is essentially their order books.

If our semiconductor-related companies are registering increasing orders, it will take some time before this information filters through to the market, while their share prices wobble amid the global sell-off.

Investors with greater visibility into those order books will likely be the ones buying the dip.

A clear indication that things remain mostly rosy for our semiconductor players is the outlook they have shared in their latest earnings updates, which have generally been positive about prospects for upcoming quarters.

JF Technology Bhd, for example – which posted a decent rise in net profits for its quarter ended June 30, 2026 – said that “the semiconductor cycle looks set to extend its upcycle” and that its “order visibility across all key business segments remains healthy”.

Pentamaster Corp Bhd, whose net profit jumped 64% in the second quarter of financial year 2026, noted that its order book continues to be supported by demand from the AI and medical devices segments.

That said, Malaysian tech stocks tend to trade at toppish valuations, which tends to put off some investors.

More importantly, investors need to keep an eye on the global bond sell-off, which is being driven in part by inflationary pressures in the United States that could lead to a rate hike.

Rate hikes, in turn, nudge bond yields higher, making bonds more attractive relative to equities.