Henderson still bullish on tech stocks
A recent dip in the share prices of core technology stocks is not a sign of that sector trending downward, according to Henderson Investors head of global technology Brian Ashford-Russell.
A recent dip in the share prices of core technology stocks is not a sign of that sector trending downward, according to Henderson Investors head of global technology Brian Ashford-Russell.
Ashford-Russell, who is also the fund manager in charge AMP’s technology fund, says there has been drops in technology stocks in September as concerns are raised about the growth capabilities of those companies which actually produce computers and computer chips.
“This is certainly not a panic situation as we continue to like the fundamental outlook for many companies in the technology universe,” Ashford-Russell says.
However Ashford-Russell says demand for new computers within the corporate market will strengthen later this year. This will happen as the latest version of the Windows operating system is rolled out and computers are upgraded to make use of the new software.
While Ashford-Russell remains bullish on a wider scale he says there are issues to consider in examining areas of the technology sector.
“We are still bullish over the US economy and on a macro view the good news is that the economy is slowing and the Federal Reserve will not lift interest rates,” he says.
“On a micro view the worry is that earnings growth will not be strong enough to support stocks with high multiples. Valuations are still high and the companies we have committed to are growing in excess of market estimates but less so than in April.”
Ashford-Russell says that Henderson’s has retained a heavy weighting in the US because the companies with the best hyper growth potential, particularly in the areas of infrastructure and broadband networks, exist in that market.
“Our prediction for the remainder of this year and early into the next is a strong upside position but with bumps along the way. The issue for us is to understand the seasonal pattern in technology and be able to manage the volatilty.”
However he says that issues of volatility can also be viewed as a good chance to get into the technology market at a lower level.
“Buying into technology on extreme corrections, around the 20 per cent mark, presents a huge discount and unless there is deterioration in the fundamentals then any such weakness must be viewed as a buying opportunity.”
AUTHOR
Jason Spits
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