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A similar index, the FTSE ST Technology Sector Index, was launched just last week. Mr Wong is not optimistic about the industry's outlook, which seems 'even grimmer'. But being sidelined by the investment community has a silver lining, said OCBC Research analyst Carey Wong. The stocks of many listed tech firms, he said, are now trading at or even below their book values. Thus, he added, downside is limited. DMG's Mr Terence Wong agreed, noting that many stocks are now at multi-year lows, trading at single-digit price-to-earnings ratios. Counters particularly worth looking at include those in the hard disk industry such as Unisteel Technology, and those with exposure to the China market such as Karin Technology. 'Everything is going digital. All this has to be stored somewhere, and hard disks are still the storage medium of choice for both consumers and businesses - at least for now,' said Mr Carey Wong. Meanwhile, as China prospers, he said, it will become an increasingly important market. Mr Terence Wong noted that opportunities will also arise through mergers and acquisitions (M&A). The valuations of some firms could make them attractive as takeover targets. This has already begun to happen, with the sector accounting for more than half of last year's M&A, he pointed out. Precision engineering firm MMI Holdings, for instance, was de-listed last July after it was bought for $1 billion by private equity giant Kohlberg Kravis Roberts. However, Mr Carey Wong cautioned that M&A action might slow this year, as private equity dries up in the wake of the sub-prime crisis. Nonetheless, the tech industry is here to stay, because there will always be replacement demand for must-have items such as mobile phones and computers, he said. 'Things won't be bad for the industry forever,' he said, and investors who are astute in their cherry-picking can expect to see some decent returns on their investments. OCBC Research's picks Micro-Mechanics:Precision toolmaker Bright World Precision Machinery: China-based stamping machines manufacturer Karin Technology: Distributor of electronic components and integrated circuit designs Map Technology: Data storage service provider Miyoshi Precision: Precision engineering firm Silverlake Axis: Banking software provider Unisteel Technology: Maker of precision fasteners for hard disk drives Venture Corp: Contract electronics manufacturer WesTech Electronics: Diversified electronic services provider Willas-Array Electronics: Electronic components distributor
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