New Delhi, March 5 Technology’s share in world market cap is nearing 40 per cent, and no sector has reached this level of concentration before, as per an analysis by DSP Mutual Fund.
Nasdaq composite now commands nearly a fourth of world equity market capitalisation.
“If we add tech companies from China, India, EU and ROW, technology’s share in world market cap is nearing 40 per cent," the report said.
No sector has reached this level of concentration before. The last record suggests that oil & gas (the broad energy sector at the time) accounted for nearly a third of world equity market capitalisation in the 1980s, the report said.
Moreover, recently, the technology space has heated up like never before, scaling summits not seen earlier. The Nasdaq composite has gained 8 per cent in share of global market cap since the Covid bottom. Over the last year-and-a-half, the IT sector indices have rallied while the performance of most other sectors has been subpar. This makes this rally highly concentrated, the report noted.
But even the tech rally is driven by the chosen ‘one’, the report said.
Since the Nasdaq peak of November 2021, most other major technology names are giving subdued performance.
Nvidia accounts for most of the returns of NYSE FANG+ and the Magnificent 7 cohorts. The rally is becoming so narrow that the market narrative is now shifting to the Super Six by excluding Tesla from the mix.
Broadly, it is only the semiconductors space or stocks which have anything to do with AI which have performed since November 2021. The broader market is much quieter, the report said.
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