“With Technology, Media and Telecom shares surging to more than 40% of US market capitalisation this year, we have been warning that gravity exists even for technology stocks. Does it make sense that the value of Apple Inc. exceeded that of the entire UK equity market or the Russell 2000 index?,” laments the CIO team in a broker’s report dated September 20.
The past three weeks have seen the cooling off of once-ravenous animal spirits driven into a frenzy by the abundance of liquidity in financial markets. Yet even as the NASDAQ 100 subsequently corrects from this stampede towards tech stocks, Citi Chief Investment Officer (CIO) David Bailin and his team see ample opportunities in the stock market that can be capitalised by diversified asset allocation from dividends and certain fixed income substitutes.
Citi’s CIO Office has expressed scepticism about the hype surrounding technology stocks even as such assets to more than 40% of US market capitalization this year. The defensive and growth characteristics of technology stocks and their role in sustaining the global economy through worldwide lockdown measures have seen such counters being the main beneficiaries of the Covid-19 pandemic.
