Aussie tech sector not immune to market downturn
It is “highly unusual” to see a market sector crash twice in two years as the technology sector falls back to pre-COVID levels, according to Dale Gillham.
While the Australian stockmarket had fewer technology stocks than its US counterpart, that did not mean it had been immune to the downturn. It was almost 11 years since a fall as large as this had occurred in the sector, Gillham said.
The sector was one of the smallest in the Australian Securities Exchange (ASX) as 87% of companies had a market cap of less than $100 million and the top five companies had a combined market cap of $60 billion.
He said: “By mid-May, the Australian tech sector had effectively fallen back to pre-COVID levels and taken with it the hopes of many investors who had jumped into technology stocks following the COVID crash.
“It is highly unusual to see any sector crash twice in the space of two years, yet the Information Technology sector fell 49% from a high in February 2020 into the COVID low of March 2020.
“It then rose nearly 200% over the following year into February 2021, as new investors and traders flooded the market attempting to cash in on the rise.
“It then fell away for a short period of time and after making a new all-time high in August 2021, it fell 44% into May 2022.”
AUTHOR
Laura Dew
Recommended for you
Perpetual has released its Q2 fund flows showing a fall back into outflows after a positive Q1, as well as an update on its planned deal with KKR.
Magellan has announced a raft of executive changes including the departure of head of investments Gerald Stack after 18 years and a second appointment from Maple-Brown Abbott.
Morningstar research of seven active Australian asset managers has found they are expected to see client redemptions averaging 3.1 per cent of their FUM per annum through to FY29, with two forecast to lose more than 10 per cent.
Franklin Templeton is to get rid of its Martin Currie branding and fold them into the wider group under ClearBridge Investments and Franklin Equity Group.
