Regulation threat prompts Munro to watch tech holdings
Munro has halved its exposure to Alibaba over regulatory pressures and is also watching the possible regulatory impact on Facebook.
In a webcast, chief investment officer, Nick Griffin, said regulation of the technology sector was a concern when investing in the tech space, however much of it was already priced into the affected stocks.
New rules in Europe could mean sites like Facebook would be required to police content more aggressively and ban them from using data to unfairly take over competitors. Breaches of the Digital Services Act and Digital Markets Act could see firms fined 10% of their global business turnover.
“Everyone already thinks there are problems with social media. Facebook’s earnings grew dramatically but I’m unsure about the multiples. But a lot of concerns about technology regulation is already priced in and will play out over a long time,” he said.
“However, we have already halved our exposure to Alibaba over the investigation, China’s regulation is different to the Western world, you can’t appeal to the Supreme Court like Facebook is doing in the US.”
Alibaba was currently under investigation by Chinese authorities over its ‘suspected monopolistic practices’ which were potentially affecting the interest of consumers and competitors and it was already fined $99,000 for breaching anti-competition law. Not only this but plans for its financial technology affiliate Ant Group were halted over the need for more supervision of internet finance.
Despite his views on Facebook, he said Google was “probably fine”, although the company was currently in dispute with Australia over its use of a new digital media code which would require Google to pay local media companies for their content.
The Munro Global Growth fund had returned 40% over one year to 31 December, 2020, according to FE Analytics, compared to the average return of 5.1% by the absolute return sector within the Australian Core Strategies universe.
Performance of Munro Global Growth fund versus global sector during 2020
AUTHOR
Laura Dew
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