Investment: Hi-tech looking a bit low
Tuesday 18 August 1998
Has the long-predicted shakeout in IT stocks finally arrived?
The simple answer is no. After all, the stock market has been sliding, and when markets fall the most highly-rated shares tend to suffer the worst falls.
IT shares had also been overbought. Earlier this year London fund managers suffered from what one analyst called "Anglotechnoanorexiphobia" - the irrational fear of being underweight in technology stocks.
In spite of the recent slide, the index is still showing a 57 per cent gain since the beginning of the year. The fall is mainly down to a few large stocks taking a tumble. Misys - the sector's largest constituent - has dropped by a quarter since early July as investors fretted about its US healthcare software business. Sema, Sage and Computacenter have lost more than 10 per cent of their value. But Logica is down less than 3 per cent while FI Group is up 9 per cent over the period.
What's more, nothing fundamental has changed. Although experts continue to worry about a shortage of skilled staff squeezing profit margins, and a slump in demand after the year 2000, there is no sign of these pressures.
The reporting season, which kicks off with Computacenter on Thursday and continues with Sema, CMG and Logica, should set the tone for the rest of the year.
In spite of the recent fall, it's hard to make a strong case for buying any of the larger IT stocks when most still change hands on forward earnings multiples of 40 or more. But barring any major upsets in the next few weeks, the IT sector should soon resume its relentless climb.
- 1 Is this bridge haunted by the ghost of nu rave?
- 2 The West has it totally wrong on Lee Kuan Yew
- 3 The day I starred in Only Fools and Horses
- 4 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
- 5 Zayn Malik quits One Direction: Hundreds of workers request compassionate leave following band member's exit
Is this bridge haunted by the ghost of nu rave?
Saudi Arabia says it won't rule out building nuclear weapons
Germanwings plane crash: Andreas Lubitz 'had eyesight problems' and woke from nightmares 'screaming we’re going down'
The battle for the Middle East's future begins in Yemen as Saudi Arabia jumps into the abyss
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
Revealed: Putin's army of pro-Kremlin bloggers
The West has it totally wrong on Lee Kuan Yew
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...