Technology Stocks have been among the weakest performing stocks across the globe so far this year, while still maintaining the strongest stock returns since the end of 2019. The SOX (PHLX Semiconductor Index) has returned to within 25% of its end-2019 level, with October declines pushing the SOX below the 5-year average price ratio spread to the S&P 500.
Similarly, in Singapore, the 10 most traded stocks relevant to the Technology Sector have averaged 33% declines in total return this year, bringing the average total return of the 8 stocks listed for the full period from the end of 2019 to 68%. The 10 stocks have seen S$323 million on net institution fund outflows in the 2022 year-to-date.
Last week, these 10 stocks averaged 11% declines with S$14 million of net fund outflows. This followed an announcement of pending US restrictions on its exports of semiconductors to China. This saw the SOX decline 9% over the week, while AEM and UMS saw symmetrical declines in the vicinity of just over 20%.
Last week Singapore’s 10 most traded technology-related stocks averaged double-digit declines, with iFAST (SGX:AIY) and Silverlake Axis (SGX:5CP) the most defensive of the 10 stocks, averaging 4% declines, while AEM (SGX:AWX) and UMS (SGX:558) averaged 22% declines.
As the MAS Managing Director noted on 20 Sep, with the United States and China diversifying their respective technology bases and supply chains, the development of important technologies such as semiconductors, artificial intelligence and 5G telecommunications will increasingly bifurcate. Coincidentally, last week’s decline in global technology stocks was preceded by the US Commerce Department implementing new export controls on advanced computing and semiconductor manufacturing items to China.
US restrictions on technology trade has been one of two key drivers for semiconductor stocks this year, with the weakening demand for consumer electronics and impact on inventories and capital expenditure, the other. The Semiconductor Industry Association reported on 3 Oct that global semiconductor sales growth has stalled in recent months, and month-to-month sales decreased in August by the largest percentage since Feb 2019.
Both AEM Holdings and UMS Holdings have now trimmed their total returns since the end of 2019 to 68% and 37% respectively, with both companies reporting record revenue growth in 1H22.
- AEM's share price is currently trading a 7x price-to-earnings ratio, a level last seen in March 2020, while
- UMS's share price is trading at an 11x ratio, a level last seen in November 2020.
| YTD Most Traded SGX Listed Technology Stocks | SGX Code |
Market Cap S$m |
YTD Average Daily Turnover S$M |
YTD Net Institutional Flow S$M |
Last Week Net Institutional Flow S$M |
Last Week Average Bid/Ask Spread (bps) |
Last Week Price Change % |
MTD Price Change % |
YTD Total Return % |
Total Return Since 2019 % |
|---|---|---|---|---|---|---|---|---|---|---|
| Venture Corp | V03 | 4,693 | 16.06 | -69.7 | -4.36 | 8.9 | -5 | -2 | -8 | 13 |
| AEM | AWX | 983 | 9.36 | -35.5 | -6.18 | 30.6 | -23 | -21 | -38 | 68 |
| UMS | 558 | 676 | 7.03 | -22.3 | -1.91 | 87.9 | -21 | -20 | -31 | 37 |
| Frencken | E28 | 369 | 5.13 | -55.7 | -1.30 | 57.4 | -11 | -11 | -55 | 2 |
| Nanofilm Technologies | MZH | 1,244 | 4.25 | -75.1 | 0.58 | 60.3 | -6 | -10 | -50 | N/A |
| iFAST | AIY | 1,090 | 3.27 | -68.2 | -0.36 | 33.4 | -4 | -6 | -55 | 271 |
| Aztech Global | 8AZ | 587 | 1.15 | -7.8 | 0.02 | 70.0 | -7 | -4 | -8 | N/A |
| ISDN | I07 | 173 | 1.08 | -3.6 | -0.01 | 136.5 | -10 | -8 | -44 | 82 |
| Silverlake Axis | 5CP | 803 | 0.62 | 14.2 | -0.07 | 157.8 | -4 | 0 | 16 | -19 |
| Grand Venture Technology | JLB | 171 | 0.29 | 1.2 | 0.00 | 244.9 | -15 | -15 | -57 | 93 |
| Average | -11 | -10 | -33 | 68 | ||||||
| Total | 10,789 | 48.2 | -322.6 | -13.6 |
Source: SGX, Bloomberg, Refinitiv (Data as of 14 Oct 2022)
As detailed in the table above, Silverlake Axis has defied the downtrend in the technology-related plays in the 2022 year thus far, generating a 16% total return.
In its FY22 (ended 30 June) Annual Report released last week, Silverlake Axis noted its FY22 ended on a positive note with double digit growth in both revenue and profitability and serves 40% of the top 20 largest banks in ASEAN. Moreover Silverlake Axis has noted that the pace of economic recovery and digital transformation has continued to accelerate in the region, with the company continuing to invest in cloud, AI, and other technologies to expand its suite of solution to ensure a strong future pipeline of products to excite customers.
