The technology sector has been one of the major victims of the recent global market crash, ruffled by the China debacle. Stocks in this sector have been on a wild ride over the past one week with most of them piling up huge losses. This is because many tech companies generate major chunks of revenues from the Chinese market.

What Happened to China?

China seemingly is trapped in a vicious cycle of slowdown with no signs of respite in the near term. The rout started with the devaluation of its currency on August 11 and accelerated last week after the country’s factory activity data for August contracted at the fastest pace in over six years. This indicates a deep-seated weakness in the Chinese economy (read: China Currency Devaluation is Awful News for These ETFs).

In order to fight against the malaise and arrest the crisis that rattled the global economy, the People's Bank of China (PBOC) on Tuesday announced another round of monetary easing. For the fifth time in nine months, it has cut its interest rates by 25 bps to 4.6%. The deposit rate has also been cut by 25 bps to 1.75% while the reserve ratio has been slashed by 50 bps to 18%.

Further, the central bank has pumped 140 billion yuan ($21.8 billion) into its economy through short-term liquidity operations. The move is expected to ease global growth concerns, infusing some confidence back into the economy.

However, some investors are still concerned that the fresh round of easing would not be enough to stabilize the world’s second largest economy and halt a collapse in the stocks. Most analysts believe that China will continue to face a long period of uncertainty that would result in more volatility. This would unfortunately continue to weigh on tech stocks.

Tech Stocks and ETFs Performance

Among the worst performers over the past week, the tech giants – Facebook (FB- Analyst Report) tumbled nearly 12.8%, followed by losses of 12% for Amazon (AMZN - Analyst Report), 11.3% for Google (GOOGL - Analyst Report), 11% for Apple (AAPL - Analyst Report), and 9.6% for International Business Machines (IBM - Analyst Report). The world's largest video streaming company Netflix (NFLX - Analyst Report) has seen a crazy run, losing nearly 18% in the same period (see: all the Technology ETFs here).
 
Semiconductor stocks such as Intel (INTC - Analyst Report) and Micron Technology (MU - Analyst Report) also saw double-digit declines. Apart from this, Cisco Systems (CSCO) shed about 12% while some small cap stocks like Workday (WDAY) and FireEye (FEYE) saw heavy losses of about 15%.
 
Given the sluggish performances, Select Sector SPDR Technology ETF (XLK -ETF report) shed 11.2% over the past five days compared to the losses of 10.8% for the broad market fund (SPY) and 10.9% for Nasdaq ETF (QQQ). In fact, iShares S&P North American Technology-Software Index Fund (IGV - ETF report)caught the eye, plunging 12.5%. This ETF, having AUM of $907 million, targets the software segment of the broader U.S. technology space.

Other terrible performers were iShares North American Tech ETF (IGM - ETF report) and PureFunds ISE Cyber Security ETF (HACK - ETF report) both dropping 11.5%. The former provides exposure to electronics, computer software and hardware, and informational technology companies while the latter offers exposure to companies that ensure the safety of computer hardware, software, networks, and fight against any sort of cyber malpractice. IGM has AUM of $755 million while HACK has $1.2 billion in its asset base (read: Cyber Security ETFs in Focus on String of Q2 Earnings Beat).

Is a Turnaround On The Way?

Buoyed by the action taken by the central bank, the U.S. futures point to a higher open with major benchmarks up over 2% in pre-market trading today. The smooth trading will definitely prop up the tech stocks higher, suggesting the nightmare might be over for the sector.

At the current level, after a brutal decline, most of the tech stocks have become extremely cheap, suggesting a nice entry point for investors. As a result, investors could do some bargain hunting on the stocks that have become amazing value picks. While looking at individual tech stocks is certainly an option, a focus on ETFs could be a less risky way to tap into the broad trends. Notably, most of the ETFs have a favorable Zacks Rank of 1 (Strong Buy), 2 (Buy) or 3 (Hold).

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