Tech bub­ble jit­ters send Wall St tum­bling

The Daily Telegraph - Business - - Front Page - By Louis Ash­worth

WALL Street tum­bled yes­ter­day, with hun­dreds of bil­lions of dol­lars wiped off the value of Amer­ica’s boom­ing tech sec­tor amid wor­ries of a Nineties-style bub­ble.

The tech-heavy Nas­daq dropped nearly 5pc as heavy­weights such as Ap­ple, Ama­zon, Mi­crosoft and Face­book lost ground. The in­dex has notched up a string of record highs in re­cent weeks.

Ann Berry, a part­ner at US pri­vate eq­uity firm Cor­nell Cap­i­tal, told Bloomberg TV the sell-off was the prod­uct of in­vestors cycling out of tech stocks to even out their ex­po­sure to price falls. “What we are see­ing is a lit­tle bit of profit-tak­ing now in the big tech sec­tor as peo­ple look to re­bal­ance their port­fo­lios go­ing into the last part of this year,” she said.

Some an­a­lysts have warned of a bub­ble sim­i­lar to the dot­com boom of the late Nineties and early 2000s, but con­sen­sus is far from clear.

Oth­ers have pointed to the stock mar­ket’s mighty bull run as tes­ta­ment to the ef­fect of the mas­sive eco­nomic stim­u­lus un­leashed by gov­ern­ments and cen­tral banks. David Miller, in­vest­ment direc­tor at Quil­ter Che­viot, said in­vestors were “be­hav­ing ra­tio­nally” by pil­ing into com­pa­nies that had suc­ceeded through the pan­demic.

“In­vestors have al­lo­cated more money to com­pa­nies that are thriv­ing, with those able to sur­vive close be­hind. On the other side of the coin, those com­pa­nies with prod­ucts or ser­vices that we no longer need or re­quire are strug­gling for at­ten­tion,” he added. “Many will not sur­vive.”

CBOE’s Vix in­dex – a mea­sure of ex­pected S&P 500 price shifts known as Wall Street’s “fear gauge” – has risen hand-in-hand with soar­ing eq­uity valu­a­tions in re­cent weeks.

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