Showing posts with label Technology. Show all posts
Showing posts with label Technology. Show all posts

Saitama Rakuten International Comments As Tencent’s Last Ten Year Rally

Saitama Rakuten International Comments As Tencent’s Last Ten Year Rally

Saitama Rakuten International comments as Tencent Holdings’ 2,636 per cent surge over the past 10 years, tech has surpassed finance as the largest component of the MSCI Asia Pacific Index for the first time since the internet bubble burst in 2000. The industry is climbing twice as fast as its closest rival in Asia this year and has trounced gains among tech shares in the U.S. and Europe.

“Prices are high, but earnings are strong, I see it as a structural, secular story rather than a cyclical one. That’s very different from the situation in the late 1990s when we saw the dot-com bubble.” Commented Nicholas Cooke, Head of Corporate Trading at Saitama Rakuten International.

According to analysts from Saitama Rakuten International, Tencent is now the biggest stock by weighting in the MSCI Asia Pacific index, followed by Samsung, Alibaba and Taiwan Semiconductor Manufacturing. In 2007, none of the gauge’s top five companies were in the tech industry. Tencent ranked a lowly 221.

Tech’s stand-out performance during the MSCI index’s current bull market, which started in February 2016, has also been a break from the past. The industry has tended to be a middling performer during rallies, ranking fourth or below during five of the past six Asia bull markets. This time it’s up 99 per cent, outpacing the broader measure by about 50 percentage points.

Some worry that the outsize gains may not last. Any signs of disappointment from tech companies during the third-quarter earnings season could spur a short-term sell-off.

SIMILAR NEWS: Saitama Rakuten International Analysts Says Financial Stocks Maintain Steady Ground

Elliot Mills, Senior Vice President at Saitama Rakuten International says that the gains so far have been supported by strong profit growth and “reasonably constructive” valuations. The MSCI Asia Pacific tech index is priced at 16 times estimated earnings for the next 12 months, versus an average of 17 at peaks in the gauge over the past decade, data compiled by Bloomberg show. Benchmark tech indexes in the U.S. and Europe have multiples of 19 and 21, respectively.

“We’re still comfortable with valuations despite the rally, Investors outside the region underestimate the amount of innovation in Asia.” Added Nicholas Cooke, Head of Corporate Trading at Saitama Rakuten International.

In Asia, it has paid to be small over the past decade. Benchmark equity indexes in Pakistan, Sri Lanka and the Philippines have led regional gains, while China has been the biggest laggard as the nation’s Old Economy shares slumped.

For more information please visit Saitama Rakuten International.