Singapore tech stocks battered after US rout

The SGX Centre along Shenton Way.
The SGX Centre along Shenton Way. PHOTO: ST FILE

SINGAPORE - Fear of over-valued tech stocks spilled over from the United States into Singapore on Tuesday (July 31), sending shares of some electronic contractors falling by more than 10 per cent on the Singapore Exchange (SGX).

In Singapore, semiconductor equipment maker AEM continued its fall from the morning, declining by 14.29 per cent, or 17 cents, to $1.02 as at 1.56pm, the largest percentage decline among the tech stocks.

On Monday after the market closed, it reported a 15.6 per cent rise in net profit for its second fiscal quarter to $9.5 million, on the back of a 16.5 per cent rise in revenue to $72.7 million. Earnings per share for Q2 was 3.49 cents, up from 3.16 cents in the year-ago period.

Hi-P, another contract manufacturer, lost 4.44 per cent, or six cents, to $1.29, recovering some of its losses from earlier in the morning, while precision machining firm UMS declined 4.12 per cent to 81.5 cents, inching up from its early morning dip.

Homegrown concern Creative continued to fall too, slipping 0.64 per cent, or four cents, to $6.17, while Venture Corp's stock recovered from its earlier shock, advancing 1.81 per cent, or 30 cents, to trade at $16.88.

The declines came after sliding tech stocks dragged all three major US indices into negative territory overnight.

The tech-heavy Nasdaq posted its biggest three-day loss since March, led lower by the so-called FANG stocks, the acronym for the high-performing quartet of Facebook, Amazon, Netflix and Google parent Alphabet.

Facebook and Netflix missed analysts' targets for the second quarter, with Facebook suffering a U$120 billion wipeout from its market value last week.

The Nasdaq Composite closed 1.4 per cent lower, Facebook lost 2.1 per cent, while Netflix closed down 5.7 per cent. Amazon and Google parent Alphabet fell 1.8 and 2 per cent, respectively.

Investors are also on edge ahead of Apple's reporting later on Tuesday, a stock seen as a industry bellwether. Its shares were down 0.6 per cent on Monday's close. Electric car maker Tesla, reporting on Wednesday, is down 2.4 per cent.

US technology shares are facing pressures of a "reality check" as many of them had climbed to record highs in anticipation of another optimistic earning season, said CMC Market analyst Margaret Yang.

"Disappointing results from Facebook and Twitter further catalysed the sell-off, as the valuations are rich, and even those who beat analysts' forecast failed to impress the shareholders. In a market full of complacency, the downside risk is larger than the upside potential should any earnings miss occurs," Ms Yang said in a note.

Investor uncertainty also saw reasons from valuations to growth prospect being floated amid the lack of positive news at the start of the week, said IG market strategist Pan Jingyi.

Ms Pan highlighted that much of the sell-downs in the US were likely the result of risk aversion ahead of multiple events on hand this week.