Demand for technology stocks, which have been at the centre of local and global investment scene for the most of the year, remains robust, with the strong tailwinds for this sector including cloud computing, artificial intelligence (AI) and 5G networks.
Brian Colello, director of technology, equity research for Morningstar Research Services, said the markets had experienced a re-rating of tech to ‘safety’.
“We would argue that tech represents relative safety in these times. Tech has never really been thought of as a safe haven sector but today we are witnessing ongoing resilience that points to this trend,” he said.
Colello, asked to name three favoured stocks, indicated Microsoft, ServiceNow and Infineon.
“The move to the subscription model with Office 365 was a game changer. It boasts of basically a monopoly in desktop operating software and has been benefiting from remote working with teams. Plus, it acquired Linkedin. It is a clear number two player in cloud computing behind Amazon Web Services but number two in this massive market is still a tremendous growth driver and extremely important,” he said about Microsoft.
“We think it is relatively fairly valued today. It has a ‘land and expand’ strategy in the IT service management, IT operations market,” Colello commented on ServiceNow.
Asked about Infineon, he said: “A European chipmaker with significant automotive exposure. All of the new features coming in cars, whether it’s rear view cameras, or parking assist, and all the bells and whistles that we’re seeing in all these cars today are being done with this technology.”
Kanish Chugh, co-head of sales at ETF Securities said: “In Australia, arguably the purest tech play available to investors is the ETFS Morningstar Global Technology ETF (ASX ticker TECH). This ETF is up 15.6% this year (as at the end of August) and tracks the Morningstar Developed Markets Technology Moat Focus Index.”
