Tech stocks’ boom continues in 2021

The pandemic has triggered nearly every industry around the globe to adapt at a rate once thought impossible


THE acceleration of digitalisation of economies and the increased demand for tech products and services will sustain investor interest in tech stock despite the sharp price gains the sector stocks registered last March.

The Technology Index rose from its low of 23.8 points to a high of 80.46 points in intraday trade yesterday before closing at 77.96 points.

Among the tech stocks gained were ViTrox Corp Bhd, which rose 0.51% or eight sen to RM15.90, while JHM Consolidation Bhd rose two sen to RM2.26.

Aberdeen Standard Investments (M) Sdn Bhd country head Gerald Ambrose attributed the strong performance of local tech stocks to the increasing usage of technological products as more companies are beginning to fully adopt digitalisation in conducting a business.

“Malaysia’s high-technology eco-system is the strongest in Asean and commands a premium among its peers, which contribute to the rally of the tech stocks.

“Another factor that boosts the counters is the increasing usage of electronics in different sectors, especially the automotive and telecommunication industries.

“As a smartphone now has become a necessity good, we expect the same for laptops and tablets and we see the demand for the devices to rise, boosting the supply chain of its manufacturing,” he told The Malaysian Reserve (TMR).

Malacca Securities Sdn Bhd head of research Loui Low believes higher demand for electronic devices, coupled with the shortage in chip production, has led to the tech-stock rally.

“Everything will be back to fundamentals, as under the Movement Control Order 2.0, most of the sectors will not be able to move ahead, while the technology segment under the manufacturing sector is able to go on,” he said.

On the global factor, Ambrose said the “helicopter money” or the money-printing exercise to spur the money flow during a recession in the US aligned with the rally at Nasdaq stock market, which indirectly facilitated the tech-stock rally globally.

“The latest helicopter money in the US coincided with the Nasdaq rally. Some retail investors here might use their Prihatin cash for similar purposes.

“There has been a swing between growth stocks and value stocks. Value stocks shot up after the vaccine was found in November as investors ‘saw through’ the pandemic, but now that President Joe Biden and his Treasury Secretary Janet Yellen are in charge, the market expects more of the helicopter money, which means more tech rallies,” he said.

Low anticipates the positive sentiment projected onto the tech stocks to last for another two quarters, as there is still a huge portion of businesses that are expected to shift towards digitalisation.

Telenor Research head Bjørn Taale Sandberg said the pandemic has triggered nearly every industry around the globe to adapt at a rate once thought impossible.

Among the trends caused by the Covid-19 pandemic is the rise to a growing percentage of people who feel isolated and lonely, which feeds a range of mental health maladies including anxiety and depression.

Sandberg said 2020 showed mankind that loneliness is a fundamental public health issue; a health issue that the research team believes will face an unprecedented technological response in 2021.

“We predict that eHealth actors will develop and roll out new sets of tools and services related to mental health. In countries with full 5G implementation, we will likely see the first uses of augmented and virtual reality (VR) technology applied in holographic communication tools, already within the next year,” he said.

Telenor expects 2021 to see a new generation of chatbots to engage with users to combat loneliness, which will draw on artificial intelligence (AI) to respond to questions, initiate calls, offer entertainment and conduct enriching activities to make users feel connected.

The other upcoming tech trend is a renewed focus on climate change, where the pandemic has pushed on for more climate-friendly actions, including the reduction for workers to commute and travel.

A World Economic Forum study highlights digital technology can cut global emissions by 15%, and several emission cuts are expected to happen already in 2021.

In cities across the world, AI is expected to be implemented to optimise energy consumption in data centres and mobile base stations, to make renewable energy more predictable and smarten up cities by optimising transport, and predict air quality, the multinational telecommunication group noted.

New autonomous modular robots will work in the fields to support farmers, and mechanical weeding will streamline the pesticidal use, reducing the environmental impact of agriculture.

However, the increasing use of technology means that there is also an increase in cybersecurity challenges.

Sandberg said as employees waste precious time struggling to remember their login details, the research team expects to see greater implementation of user-friendly security solutions in 2021.

“Password managers across sectors, or iris and fingerprint scanning solutions will be more common, ensuring efficiency, security; and one less pain point for workers,” he said.

He added that the education sector was also faced with challenges, forcing teachers to adopt creative methods to teach online, but that also means there will be a gap between those who are connected and those who are not.

Sandberg said if this urgent issue is not properly addressed, both internationally and within nations, then the entire human race risks significant setbacks and a widen- ing educational gap in the coming years.

“In order to bridge this gap, the education sector, and information, communication and technology actors must join forces, working together to ensure robust and faster networks, and to promote and support digital literacy for all,” he said.

As such, 2021 is expected to see an escalating number of new and creative methods of remote learning to emerge, especially for those equipped with network access and Internet-capable devices.