Malaysia Tech Outlook Could Stay Positive — Market Talk

Malaysia's technology sector could remain on a positive trajectory in 2H, although volatility might increase as investors shift their focus to earnings delivery from valuation gains, Hong Leong IB analysts Toh Woo Kim and Sam Jun Kit say in a note. The sector is moving into an earnings-upgrade cycle that has yet to be fully reflected in consensus forecasts from a re-rating phase. The global backdrop remains supportive, thanks to sustained artificial-intelligence infrastructure spending by U.S. hyperscalers and continued fundraising across the broader AI ecosystem, they say. However, any resurgence in U.S. inflation or a more hawkish Federal Reserve could weigh on risk appetite and technology valuations, they add. Hong Leong maintains an overweight rating on Malaysian tech, pegging Itmax System, UWC, Frontken and Unisem (M) as its top picks. (yingxian.wong@wsj.com)