Technology stocks have been among the best performers this year. Still, some analysts believe that investors should be more picky with tech stocks going forward.
Diversification advised
Mark Haefele, CIO of UBS Global Wealth Management, believes that stocks that represent the ‘more normal’ theme will perform better than tech giants.
The investment banking company said that recent price volatility seen in the tech sector has indicated concentration risks and also signalized that uncertainty regarding the technology antitrust will persist until the US presidential election.
“We think global equity gains from here may lean more heavily on ‘more normal’ themes rather than the ‘stay at home’ dynamics that have favored mega-cap tech,” UBS said.
The Zurich-based bank encouraged investors to diversify within the technology sector.
“Tech stocks are not in a bubble, in our view, and are fairly valued given their earnings growth outlook,” UBS said.
The firm still likes “many of the largest names” but also pointed out that now is a good time to renew mega-cap tech investments with newer themes.
“We like 5G enablers and platform beneficiaries, which include leaders in smart mobility, cloud, and gaming, as well as China’s digital economy stocks, including ecommerce, food delivery, travel, search and fintech services,” UBS said.
The bank forecasted that the next rally will likely be predicated on progressive mobility gains, optimistic Covid-19 vaccine developments as well as developments in United States political dynamics. British stocks, US mid-cap stocks, rising market value stocks and worldwide industrial stocks are all likely to benefit from this trend, the bank said.
“Rebalancing mega-cap tech exposure does not mean selling it all off,” UBS added.
The wealth manager pointed
