Asian tech traders have turned skeptical after a massive equity drop of more than $1.4 trillion of tech stocks. While this massive drop has made some tech traders to be skeptical, some are still pinning their hopes in the market which is always known for constant fluctuations.
Despite the $1.4 trillion busts, many tech traders remain optimistic when it comes to prospect for earnings. Many analysts cited the growing demand for tech parts and processors for auto and consumer devices as one of the major factors that will play a big part in the revival of the industry, at least in the region.
Based on the data provided by MSCI Asia Pacific Index, tech stocks have dropped a massive 20 percent in value in 2018 alone. The three stocks that were hurt the most are Samsung Electronics Co and Tencent Holdings Ltd. Samsung even suffered the biggest drop in its market value since 2000.
Taiwan Semiconductor Manufacturing Co. recorded a 1.7 percent drop. While this is not massive as compared to that of Samsung and Tencent, the company is poised to set its first annual decline since 2008.
What drove many investors away from tech stocks is the industry's rather slow performance in recent quarters. Demands for semiconductors and smartphones have seen their decline for the first time in a number of years. Tech giant Apple even reported a weak iPhone sales and was forced to downgrade its earnings forecasts.
Rubbing salt to the wound is the fact that China and the United States are embroiled in a bitter trade war. Further complicating things is the arrest of Huawei Technologies Chief Financial Officer Meng Wanzhou in Canada, a development that has sent shivers to a majority of tech investors. Analysts believe that trade uncertainty, especially in today's political and economic climate, will continue.
Following the massive bust, revenue cost from electronic auto parts has completely outpaced the rate of shipment growth for car products. This data was provided by Morningstar analyst Kazunori Ito. He added that the digitization of many companies across many sectors will help revitalize the industry.
Analysts also believe that the trade war between China and the United States is stoking fear among investors. On top of that, more and more Chinese companies are getting competitive in the market forcing some American tech companies to cut their operating expenses by resettling in other countries.
