(Bloomberg) -- Asia tech stocks may have halted their slump, but this year is proving to be a pretty bad one for them.
While the sector has had a tendency to move in tandem with its U.S. counterpart, 2018 is shaping up very differently: the MSCI Asia Pacific Information Technology Index has slumped 11 percent, while its S&P 500 Index version has rallied 17 percent. That’s the biggest performance gap since 1998.
The culprits: internet behemoth Tencent Holdings Ltd., the biggest company on the Asian gauge, has lost more than $100 billion in value since January amid concerns over the sustainability of earnings from its lucrative games business. Samsung (LON:0593xq) Electronics (KS:005930) Co., the second-largest stock, saw almost $40 billion vanish because of weakening memory-chip demand.
Even U.S.-listed Alibaba (NYSE:BABA) Group Holdings Ltd. -- not included in the S&P 500 Information Technology Index -- has dropped more than 6 percent this year.
While Apple Inc (NASDAQ:AAPL).’s growth plans still play a role in the performance of suppliers in Asia, company-specific news and the impact of industry demand have clearly become front and center for the region’s tech giants.
What’s more, the future of U.S.-China trade is going to be key. Morgan Stanley (NYSE:MS) analysts led by Shawn Kim recommended in July investors lower their exposure to tech shares in the near term amid trade-related risks and a lack of earnings upside.
The MSCI Asia Pacific Information Technology Index is trading at about 13.5 times estimated earnings for the next year, the least since March 2016 and more than 35 percent lower than its S&P 500 counterpart. In the past two decades, the Asian and U.S. gauges have moved in tandem every year except for 2015 and 2011.