KUALA LUMPUR (June 24): Malaysian technology stocks regained some lost ground on Wednesday as investors moved in to pick up semiconductor-related counters battered by the previous day’s sharp sell-off.

ViTrox Corporation Bhd (KL:VITROX), the top stocks in terms of market capitalisation, rose 2% while UWC Bhd (KL:UWC) climbed 22 sen or 4% after reporting an earnings jump. Bursa Malaysia Technology Index, which tracks 52 stocks in the sector, rose nearly 2%.

Sector fundamentals and near-term earnings visibility remain intact with order books among Malaysian chip-related companies heavily loaded for the rest of the year, an analyst from RHB Research told The Edge.

Liquidity remains supportive thanks to local investors, including Shariah-compliant funds that have a relatively limited pool of sectors to invest in, the analyst said.

Momentum, however, appeared wobbly with most stocks in the sector off highs as investors await quarterly results of American memory firm Micron Technology Inc set to be released later on Wednesday.

Semiconductor design firm SkyeChip Bhd (KL:SKYECHIP) ended Wednesday down 1.7% after gaining as much as 4.3%. Concerns over a hawkish Federal Reserve is also weighing on growth stocks that come with high valuations while strengthening the US dollar.

The ringgit’s current weakness against the US dollar could also help to support exporters, Rakuten head of equity sales Vincent Lau told The Edge.

The local currency has lost over 4% against the greenback in June after bucking the decline of most Asian currencies throughout the Iran war.

US monetary policy is a key headwind for technology stocks, according to an analyst from MBSB Research. The issue for technology sector is less about immediate earnings and more about valuation as higher interest rates could curb capital expenditure, the analyst added.