7 Tech Stocks on Bursa Malaysia in HLIB's Radar: Who Wins When the Ringgit Strengthens?
Many new investors often ask: "When the Ringgit strengthens against the USD, will Malaysian tech stocks fall?"
The logic makes sense—most of our tech companies sell products in US Dollars (USD). When converted back to a strengthening Ringgit, the currency translation does show some impact.
However, a recent report from Hong Leong Investment Bank (HLIB) reveals something interesting: Don't worry too much about currency—focus on company quality.
We share with you what HLIB sees for your guidance.
1. The Myth of "Ringgit Up, Tech Down"
HLIB conducted a study using 5 years of historical data. The results were surprising:
Weak Correlation: The price movements of tech stocks are actually not heavily dependent on the strength of the Ringgit or USD.
What Are the Real Factors?: Tech stock prices are more influenced by these two major factors:
Global Chip Demand: Is the world in a frenzy buying electronics and AI? (Semiconductor cycle).
US Interest Rates (Fed): The United States central bank policy.
Simple example: In 2020, tech stocks surged not because of currency, but due to high global demand. In 2022, stocks fell because America raised interest rates, not purely because of currency movements.
2. Current Strategy: "Stock Picking"
HLIB advises investors not to buy an "entire sector" indiscriminately. You need to be more selective (stock picking).
Why? Because when the Ringgit strengthens, only companies with truly strong businesses can withstand it. Weak companies (those that only profited from currency exchange) will be left far behind.
Characteristics of companies HLIB favours:
Strong revenue growth.
Large operational scale.
Ability to absorb costs even when currency exchange is unfavourable.
3. Quick Updates on Popular Companies
What is the latest on tech companies on Bursa? Here is an easy summary from HLIB's research:
Big & Mid Cap Players
ViTrox (VITROX): Still strong. Although their main market is China, sales in India, the US and Mexico are increasingly encouraging.
Inari Amertron (INARI): Slightly sluggish at the moment (especially the radio frequency segment). Management expects a full recovery by financial year 2027.
UWC Bhd (UWC): Very positive. Demand from clients is surging rapidly. They are investing another RM100 million to expand their factory.
NationGate (NATGATE): Has massive potential from new server projects. Gross profit is expected to reach hundreds of millions of USD from their client's new factory.
Small Cap & Others
Kobay Technology: Their AI server manufacturing facility is running at full capacity.
3Ren Bhd: Currently benefiting from spillover projects from giants like Intel and AMD.
SkyeChip (Upcoming): This is a company that is not yet listed (Unlisted), but HLIB says they are formidable in AI chip design. They may IPO (enter the stock market) around April 2026.
4. HLIB's Top Picks
Overall, HLIB has placed a NEUTRAL rating on the technology sector. This means they are not overly bullish (very optimistic), but not bearish (negative) either. This is because current tech stock prices are considered somewhat "expensive" (PE Ratio of around 32 times 2026 earnings).
However, for investors who still want to buy, HLIB recommends these 3 names considered the most stable and promising:
ITMAX System (KL:ITMAX) – Consistently profitable.
UWC Bhd (KL:UWC) – High growth potential.
Frontken Corp (KL:FRONTKN) – Strong in services for the chip industry.
What Can You Do Now?
Don't panic sell your stocks just because the Ringgit is strengthening. Review your portfolio:
Does the company you hold have a business that is truly growing (securing new projects, new factories)?
Or is that company merely relying on windfall profits from currency exchange?
If a company is "building a new factory because they can't keep up with orders", that is a good sign even when the Ringgit is rising.
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Disclaimer: This article is a compilation of information from the HLIB report and is intended for educational purposes only, not as buy/sell advice.
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