Asian tech firms sink as US tax boost wanes

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HONG KONG: Tech giants including Samsung and Tencent sank in Asian trade on Tuesday, tracking a sell-off in their US rivals and dragging most regional markets lower.

While investors welcomed news that the US senate had finally passed controversial tax reforms, the deal must still be reconciled with a House bill, while the probe into alleged Russian meddling in last year’s election continues to dog Donald Trump.

The Dow closed at a record high on Wall Street but the Nasdaq tumbled more than one percent as dealers shifted out of the tech sector, which has enjoyed a healthy rally through the year, and into financial firms.

“Renewed weakness in the tech sector weighed at the bell” in New York, said Stephen Innes, head of Asia-Pacific trading at OANDA.


“However, it’s not as if the tech sector is under stress but rather some equities rotation remain in vogue as investors seek out opportunities in more tax reform sensitive stocks.”

Samsung fell 0.4 percent, while Tencent sank 1.3 percent and Sharp lost 1.6 percent.

On broader markets Tokyo ended the morning session 0.4 percent lower, Hong Kong eased 0.2 percent, while Sydney and Shanghai each dipped 0.1 percent

Wellington, Taipei and Kuala Lumpur were also lower but Seoul, Singapore and Manila edged up.

May’s Brexit woes

Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers, also warned of the possibility of a key corporate tax cut delay as part of the Senate-House talks.

“I still believe that the market is pricing in a lot of optimism and if lawmakers delay implementation of this policy to 2019, I would expect to see a correction accordingly,” he said.

On currency markets the pound continued to struggle against the dollar after falling on news that Britain and European negotiators had failed to reach an agreement on Brexit.

Sterling had rallied on hopes British Prime Minister Theresa May was close to a divorce deal but the talks collapsed after the Democratic Unionist Party said it would not back her position on the future of the Northern Irish border.

The British unit sank from a high of $1.3539 to $1.3414 on the news before edging back slightly.

Investors are keeping a watch on events in Washington as political risk returns to the fore after Trump’s former national security adviser Michael Flynn admitted lying to investigators probing Russia’s possible involvement in the election.

Flynn has agreed to co-operate with special counsel Robert Mueller, fuelling speculation it could ensnare members of the White House and even Trump.

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