KUALA LUMPUR (Feb 5): Malaysian technology stocks slumped sharply on Thursday as the sell-off in US tech counters reverberated across Asian markets.

The latest US earnings season has prompted investors to reassess the artificial intelligence (AI) narrative, with concerns mounting over stretched valuations and the heavy scale of AI-related spending.

The Bursa Malaysia Technology Index, which tracks 50 companies, fell more than 4% by the midday break to 53.63 points, erasing gains back to August 2025 levels before the sector’s rally in the fourth quarter last year.

By market close, the index pared some losses to end at 53.9 points, still down 3.78%.

Malacca Securities head of research Loui Low said the weakness back home reflected both sentiment spillover from the US and a strengthening ringgit.

From a technical perspective, Low noted that Malaysian technology stocks have slipped below long-term support at the 200-day moving average, turning sentiment more bearish as the index forms lower lows on the daily chart.

Market breadth was deeply negative, with 38 decliners, no gainers, and 12 stocks unchanged.

Among the hardest hit was Awanbiru Technology Bhd (KL:AWANTEC), which tumbled 18%, while Zetrix AI Bhd (KL:ZETRIX) dropped nearly 13%. D&O Green Technologies Bhd (KL:D&O) also declined, falling 5.98%.

Large-cap semiconductor firms were not spared, with Inari Amertron Bhd (KL:INARI), ViTrox Corp Bhd (KL:VITROX) and Unisem (M) Bhd (KL:UNISEM) retreating between 3.8% and 4.9%

Meanwhile, AmInvestment Bank head of research Paul Yap Ee Xing wrote in a strategy note that the start of the year has exposed a structural constraint, with funds remaining 'underweight' on the one sector that is performing — banks.

“With cash levels at just 5.5% of assets under management as of December 2025, managers cannot simply add exposure to correct tracking error. Instead, they must sell to buy, and the chosen path has been rotation out of technology and industrials,” he said.

“Returns are becoming less about the best stories and more about forced positioning and liquidity,” Yap added.