With global governments intensifying the deployment of COVID-19 vaccines, there is a possibility of faster-than-expected reopening of the global economies. Technology stocks, which typically outperform in the early stages of an economic recovery, are poised to rise further. However, that is not the only thing propelling growth in the region's technology sector.
The growing demand for new technologies has been a catalyst for the region’s technology sector. As these structural trends are here to stay, tailwinds remain strong for the upstream semiconductor industry. DBS Group Research believes the industry will be less cyclical going forward.
In terms of valuation, Singapore tech stocks are still the cheapest, compared to peers in the region.
With the structural trends driving technology, the long-term uptrend is intact for the upstream semiconductor industry.
Along with the accelerating pace of digital adoption driven by the COVID-19 pandemic and the recent chip shortage issues, we expect this industry to be less cyclical going forward.
In terms of valuation, Singapore tech stocks are still the cheapest, compared to peers in the region. We continue to like AEM, UMS, and Frencken.
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