The tech industry is in a downturn now, with the key semiconductor segment suffering especially from softening demand and newly-added capacity. However, given how the stock market moves ahead of the industry, a team analysts from DBS Group Research, led by Ling Lee Keng, are suggesting that investors position themselves to capture the recovery seen by end of the year. “Based on the historical trend, the gap between the industry and the stock market is usually less than a year,” says DBS in a March 20 report.
Citing the industry benchmark, the Philadelphia Semiconductor Index, or SOX, DBS notes that the downtrend started in January last year, while the peak shipment came about in May. Citing the historical trends, DBS says investors can expect another 10% to 30% downside in semiconductor shipment data (refer to chart) over the next few months, but the uptrend should remain intact. “Based on this analysis, we can look to position ahead of the anticipated recovery in the industry,” the analysts say.
