Technology is the sector that has performed third worst on the US collective index S & P500 this year, with a landslide of almost 20 percent – and is thus on its way to the worst annual fall since 2008 when it fell 43.7 percent.
The sector has risen on an annual basis over the past three years, and is up in 12 of the last 14 years.
Much of the upturn has been driven by several factors, including low interest rates and passive investment. The effects from 2010 are now being reversed, with higher interest rates, historically high inflation, according to Bank of America.
“This poses a high risk to the last decade’s winning sector,” Savita Subramanian, head of US equities and quantitative strategy at Bank of America, wrote in a letter to her clients, according to CNBC.
Increased inflation
Inflation in the US is now climbing faster than in decades, and has led the US Federal Reserve to raise interest rates twice this year already. The Federal Reserve expects to continue with interest rate increases this year, and at the same time expects to withdraw support measures for the economy that were introduced when the corona pandemic broke out.
Higher interest rates hit growth companies as they often need a lot of money for the business to grow, at the same time as it means that the present value of profitability falls further in the future.
On the Oslo Stock Exchange, companies such as Kahoot and Pexip are down 63 percent and 76 percent in one year.
During last year, the bubble burst in the growth stocks and Kahoot’s own growth also began to fail. The share price plummeted and it did not look good when major shareholder and financier Jan Haudemann-Andersen sold down early in the summer after the price had fallen so much.
–
