Apple soars, and other tech stocks gain

The launch date of the iPhone 8 is still not known, but many Apple fans are already excited.

After all, it will be the 10th anniversary of the iPhone, which helped turn the Mac computer-maker into the world's most valuable company for five years now.

Last week, Apple thrilled many of its investors when it announced its expectation-beating third-quarter earnings.

It reported fiscal third-quarter earnings of US$8.72 billion (S$11.8 billion), up from US$7.8 billion a year ago.

Apple shares surged 6 per cent to hit a record high, taking its market capitalisation above US$830 billion.

Other technology-related stocks worldwide, already on the rise the past year, benefited. Taiwan, home to electronic manufacturers who are key suppliers for Apple products, has many examples.

The MSCI TW IndexSM, which tracks the performance of large and mid-cap companies there, rose to a 17-year high in June, noted a Singapore Exchange (SGX) report last week.

The technology-heavy index has climbed 15 per cent so far this year, on optimism over the global technology supply chain.

Boosted by Apple orders, Taiwan reported better-than-expected export figures on Tuesday - last month's exports rose 12.5 per cent from a year earlier, expanding for the 10th consecutive month - and six of 10 contributors to the year-to-date gains of the MSCI Taiwan IndexSM are key suppliers for the iPhone, said SGX's report.

In the US, the technology sector of the S&P 500 Index has finally recovered from the dot-com bubble crash at the start of the millennium.

Aside from Apple, the rebound is being led by other big technology names, such as Facebook, Amazon, Microsoft and Google - all in the list of the top 10 most valuable firms globally.

The technology rally is also pulling up China-related firms listed in the US, such as Baidu, Alibaba and Taiwan-listed TSMC, noted SGX.

The opportunities this presents for cross-border retail and online businesses have lured global giants from Apple, Amazon and Facebook to Microsoft to try cracking into the Chinese market Singapore Exchange

China Internet giants Baidu, Alibaba and Tencent, along with Chinese e-commerce site JD.com and travel services provider Ctrip, were also major drivers behind this year's 31 per cent surge in the MSCI China Free IndexSM, which comprises large and mid-cap companies listed outside the mainland.

Tencent and Alibaba exceeded US$300 billion each in market capitalisation for the first time this year, placing them among the top-10 most valuable in the world. They also displaced the state-run banks and oil-and-gas conglomerates that topped the charts of China's most valuable public companies for a decade or more. Just five years ago, all in the top-10 were financial or energy operators.

RISE

The rise of Baidu, Alibaba and Tencent has the world taking notice of the lucrative Chinese market, said SGX.

"The opportunities this presents for cross-border retail and online businesses have lured global giants from Apple, Amazon and Facebook to Microsoft to try cracking into the Chinese market," it said. "However, regulation and censorship pose stiff challenges to comply with local cyber security laws."

Local investors can participate in the booming Chinese technology scene. SGX is the only international exchange that offers a single, multi-asset platform for investors to trade assets across equities, currencies and commodities in the greater China region.

Currently, the SGX FTSE China A50 Futures allows investors without access to China to gain access to Chinese equities.

In June, SGX launched the SGX MSCI China Net Total Return (NTR) Index Futures and SGX MSCI Taiwan NTR Index Futures.

They provide investors with an opportunity to capture the equity market performance of securities listed in China and Taiwan, respectively, including dividends, if any, paid by the stocks composing the index, said SGX.

Local investors can also look to our own technology industry and make use of SGX's free market depth access, which has been extended to the end of September due to positive response. (See report on right.

BEST PERFORMING

Technology has also been the best performing sector on the SGX this year, noted an SGX report last week. Over the first seven months this year, the sector's indicative return was a whopping 47.7 per cent.

By comparison, the Straits Times Index generated a total return of 17.6 per cent for the same period.

The IT Sector maintains a combined market capitalisation of $12.6 billion, with Venture Corporation being the largest stock of the sector.

One in 10 stocks listed in Singapore represent the IT sector, with the majority of companies associated with technology hardware manufacturing.

Like the indicative sector returns, the 10 largest capitalised stocks of the IT sector have averaged a 47.9 per cent total return in the first seven months of this year, with performances ranging from a 101 per cent gain for Hi-P International to a 2.6 per cent gain for GP Industries, noted SGX.

Singapore's technology firms might not be as cutting edge as the big names, but they form a bedrock as technology evolves.

"While semi-conductors and technology hardware manufacturing are traditional strongholds of Singapore, they form a foundation as disruptive technologies proliferate. Disruptive technologies challenge established ways of doing business with efficient digital alternatives," added SGX.