Change in the new normal
WHILE glove stocks are the rage on Bursa Malaysia, the other group of stocks that have made its strong move maybe from the shadows of the thematic play of the market are the tech stocks.
The rally has been strong for the group of stocks to chalk up a strong rise in the technology index of Bursa Malaysia.
The index is up 82.65% from the depths of the Covid-19 crisis and in that upward drive, has lifted the share prices of the tech stocks to impressive levels almost rivalling that of the glove stocks.
As talk of a new normal start to reverberate throughout the business circles and normal lives, the new normal will inadvertently change a number of facets of working and daily lives.
The use of technology has been the centrepiece of how the Covid-19 disease has brought about a change in the way things are done. Just like at the start of the century, which ushered in the dotcom boom, the bust of that group of stocks was precipitated by the high and at that time unrealistic valuations they were fetching.
But the technology revolution continued despite the collapse in those stocks. What was envisioned to take place has turned into reality, it just took a lot longer.
We have online shopping that has turned main streets around the world into a state of despair and now, the use of technology to make purchases and even communication has seen changes in how people have adapted to continue with their lives during the pandemic.
The difference between the glove and tech stocks is that there will be a longer lasting change brought about by technology people use. The adoption of new technologies will see new services brought about by 5G that is starting its rollout and other technologies that will see people get used to the new normal.
But investors too have to be wary of chasing super high valuations of those stocks. The hype and promise is there but the reality is that just like at the turn of the century, there will be a period of gestation before technology once again brings about a evolution to businesses and daily lives.