Technology Sector Faces Headwinds, Caution Prevails Over Semiconductor Cycle Outlook

The FBM Technology Index fell 1.2% today, making it the worst-performing sector. Key heavyweights like Malaysian Pacific Industries (MPI, -2.5%) and Frontken Corp (FRONTKN, -1.8%) faced selling pressure. While the long-term demand outlook remains positive, technology stocks are undergoing a short-term correction due to global customer inventory adjustments and poor performance of US chip stocks. Analysts suggest that the pace of the semiconductor industry recovery might be slower than initially projected, with more substantial order growth expected only in the latter half of 2026. Investors are rotating out of high-valuation stocks into defensive sectors like utilities and banking.