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Business News/ Opinion / The tech sell-off
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The tech sell-off

Recent wave of selling that hit IT stocks in global markets should be like a splash of cold water in the face for investors

A file photo of the New York Stock Exchange. Photo: AFPPremium
A file photo of the New York Stock Exchange. Photo: AFP

The recent wave of selling that hit technology stocks in major global markets should be like a splash of cold water in the face for exuberant investors. These past few months have seen soaring valuations of global technology companies in both public markets as well as in acquisition deals. There have also been initial public offers attracting the investing hordes.

Comparisons with the dotcom bubble may be unwarranted as business models today are more robust, while valuations have not yet reached the levels seen during that maniacal era. Facebook is not quite in the same league as pets.com when it comes to measures of irrational exuberance. But the steep increase in the value of technology companies provides enough room for worry.

The gradual tightening of US monetary policy is expected to hit investments in risky assets. The first wave of selling hit the emerging markets in the middle of last year. Now it seems that the same logic is being applied to global technology stocks.

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Published: 09 Apr 2014, 12:43 AM IST
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