TechCentralTechCentral
    Facebook Twitter YouTube LinkedIn
    Facebook Twitter LinkedIn YouTube
    TechCentralTechCentral
    NEWSLETTER
    • News

      Icasa moves to license more broadband spectrum

      17 August 2022

      Eskom to impose more load shedding

      17 August 2022

      Tiger Brands to go solar – to start with four manufacturing plants

      17 August 2022

      Google buys into African e-logistics firm Lori Systems

      17 August 2022

      A new normal is dividing the global chip industry

      17 August 2022
    • World

      Tencent reports first-ever sales decline

      17 August 2022

      Chip makers are flashing a big warning for the global economy

      17 August 2022

      Semiconductor boom turns to bust

      16 August 2022

      Tencent plans to offload R400-billion Meituan stake: sources

      16 August 2022

      Ether leaps higher on verge of Merge

      16 August 2022
    • In-depth

      African unicorn Flutterwave battles fires on multiple fronts

      11 August 2022

      The length of Earth’s days has been increasing – and no one knows why

      7 August 2022

      As Facebook fades, the Mad Men of advertising stage a comeback

      2 August 2022

      Crypto breaks the rules. That’s the point

      27 July 2022

      E-mail scams are getting chillingly personal

      17 July 2022
    • Podcasts

      Qush on infosec: why prevention is always better than cure

      11 August 2022

      e4’s Adri Führi on encouraging more women into tech careers

      10 August 2022

      How South Africa can woo more women into tech

      4 August 2022

      Book and check-in via WhatsApp? FlySafair is on it

      28 July 2022

      Interview: Why Dell’s next-gen PowerEdge servers change the game

      28 July 2022
    • Opinion

      No reason South Africa should have a shortage of electricity: Ramaphosa

      11 July 2022

      Ntshavheni’s bias against the private sector

      8 July 2022

      South Africa can no longer rely on Eskom alone

      4 July 2022

      Has South Africa’s advertising industry lost its way?

      21 June 2022

      Rob Lith: What Icasa’s spectrum auction means for SA companies

      13 June 2022
    • Company Hubs
      • 1-grid
      • Africa Data Centres
      • Altron Document Solutions
      • Amplitude
      • Atvance Intellect
      • Axiz
      • BOATech
      • CallMiner
      • Digital Generation
      • E4
      • ESET
      • Euphoria Telecom
      • IBM
      • Kyocera Document Solutions
      • Microsoft
      • Nutanix
      • One Trust
      • Pinnacle
      • Skybox Security
      • SkyWire
      • Tarsus on Demand
      • Videri Digital
      • Zendesk
    • Sections
      • Banking
      • Broadcasting and Media
      • Cloud computing
      • Consumer electronics
      • Cryptocurrencies
      • Education and skills
      • Energy
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Motoring and transport
      • Public sector
      • Science
      • Social media
      • Talent and leadership
      • Telecoms
    • Advertise
    TechCentralTechCentral
    Home»Sections»Investment»Analysts see signs of excessive optimism in US tech rally

    Analysts see signs of excessive optimism in US tech rally

    Investment By Agency Staff25 November 2020
    Facebook Twitter LinkedIn WhatsApp Telegram Email
    Image: Hans Eiskonen

    Technology and Internet stocks have been among the standout performers in 2020, but the scale of their advance has underlined concerns over valuation, suggesting a risk if companies aren’t able to live up to the robust optimism investors have.

    Sentiment has grown ever more bullish of late, a classic contrarian indicator that analysts said should signal caution. Tech stocks, where valuations have long been in question, have been a focus of this risk.

    “There’s a lot of complacency,” said Ted Mortonson, technology desk sector strategist at Baird. “On a scale of 1-10, complacency is at a nine, and meanwhile the fear index is zero.”

    There’s a lot of complacency. On a scale of 1-10, complacency is at a nine, and meanwhile the fear index is zero

    Mortonson singled out Coupa Software and Zoom Video Communications as names where the valuation appeared excessive after recent gains. Coupa has more than doubled in 2020, while Zoom has soared more than 530% as one of the most high-profile beneficiaries of the pandemic. However, he also noted that the Philadelphia Semiconductor Index was up about 40% thus far this year, as was an exchange-traded fund dedicated to software.

    “You have to be in these names or you’ve massively underperformed,” he said in a phone interview. Mortonson added that many tech-adjacent industries would see permanently higher demand as a result of the pandemic, including e-commerce and cloud computing, but that valuations appeared so high that rallies were unlikely to continue. “Institutional investors had a fear of missing out back in April, but now everyone has jumped in the pool.”

    ‘Most bullish’

    BofA Global Research’s November survey of fund managers showed that managers were “the most bullish they’ve been all year”, and that cash levels represented 4.1% of portfolios, “a level we haven’t seen since before Covid-19 and close to triggering a ‘sell signal’”. Investors who participated in the survey, according to BofA, described being long on tech as “far and away the most ‘crowded trade’”.

    The S&P 500 IT index is the biggest percentage gainer among sectors this year, up almost 31%. It is followed by the 27% advance of the onsumer-discretionary index — which includes such high-flying e-commerce stocks as Amazon.com and Etsy — and by the 16% rise of the communication-services index, where names like Facebook, Alphabet and Netflix are classified.

    The tech-heavy Nasdaq 100 is up 36% in 2020, while the S&P 500 is up nearly 11%. Much of the S&P’s advance has come in November amid signs of progress for a Covid-19 vaccine.

    Morgan Stanley noted a “dramatic shift in sentiment”, which has resulted in an “almost universally bullish view from investors, including retail”. Analysts led by Michael Wilson added that it is “very hard to find a bear on 2021”, and that the recent rally “appears exhaustive”, while the market “seems ripe for another correction”.  — Reported by Ryan Vlastelica, (c) 2020 Bloomberg LP

    Coupa Software Nasdaq top Zoom Zoom Video Communications
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email
    Previous ArticleHuawei smartphone market share to slump to just 4% in 2021: TrendForce
    Next Article How corruption flourished at EOH

    Related Posts

    Icasa moves to license more broadband spectrum

    17 August 2022

    Tencent reports first-ever sales decline

    17 August 2022

    Eskom to impose more load shedding

    17 August 2022
    Add A Comment

    Comments are closed.

    Promoted

    Top cybersecurity challenge is inadequate identification of key risks

    17 August 2022

    Acrobat Sign and Microsoft accelerate digital transformation

    17 August 2022

    HPE SimpliVity: addressing SMBs’ data conundrums

    16 August 2022
    Opinion

    No reason South Africa should have a shortage of electricity: Ramaphosa

    11 July 2022

    Ntshavheni’s bias against the private sector

    8 July 2022

    South Africa can no longer rely on Eskom alone

    4 July 2022

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2022 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.