The technological sector has grown significantly and, even technically, remains more vulnerable to potential pressures, although during March crash it turned out to be more defensive than S&P 500. The announcement of the vaccine and the pressure on the American technological giants were followed by the pressure on the Chinese technological giants.
On the occasion of the cancellation of the colossal public offering (IPO) of Ant Group and then with the efforts of the Authorities to break the monopoly power of the Chinese companies, there have been strong liquidations of Meituan, Alibaba, Tencent, JD.com and Xiaomi stocks.
I will continue to urge us to keep an eye on the total outlook and not the short-term fluctuations. The technological and the e-commerce sectors have a long way to go. It is noteworthy that Alibaba’s sales during Single Day amounted to $74 billions, that is 26% more than last year. Considering that, it is not surprising that four out of the five big shareholders of the company (asset managers, family offices) fortified their positions during the recent correction.
Concerning Nasdaq, the scenario of a new upward movement seems quite possible as more and more countries and states are undergone lockdowns and work- from- home recommendations again. Furthermore, we shall not forget that we are going through the pre- holiday season and markets are peaking while the event of Black Friday is expected. Also, emails and Viber of billions of consumers are already being overwhelmed with incredible discounts for online shopping. It seems quite possible that internet giants’ sales will exceed all expectations in the fourth quarter.
There are great investment opportunities in China for the coming years. The technological, consumer staples, health and infrastructure sectors, in my opinion, will offer significant returns to investors. In recent months, China has outperformed S&P 500 and this is noteworthy. China ETFs are already a component of XSpot Wealth Growth portfolio and we estimate that it will be a very profitable investment choice for the future, as it not only increases the potential return, but also reduces the investment risk.
China comes out of this situation super powerful. The fact that Chinese managed to handle the coronavirus successfully has given them an edge. With a return to normality of over 85%, innovation and digital revolution are expected to lead China into a new era. The pandemic has just unleashed the forces of technology and this is an important development for the future.