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Momentum in Tech Likely to Continue, Ramjee Says

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Bloomberg Jun 21, 2024 18:18 · 15.8k Views

Pictet Asset Management Co-Head of Multi Asset Shaniel Ramjee says tech companies are "out-earning the rest of the market." Speaking on Bloomberg Television, Ramjee says he sees the momentum in the tech industry continuing. "We have some options expiring today that could end up being a little bit of a breather for the market, but we don't think this is anything material to worry about because the long term story remains intact," he says.

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Transcript

  • 00:00 I think valuations do matter when we're in extremes and especially if earnings aren't keeping up
  • 00:05 with those
  • 00:06 valuations.
  • 00:07 And what we see today is that especially in the tech space, we are seeing earnings really out earn the rest of the market.
  • 00:12 So for us, we still see momentum continuing.
  • 00:16 Now we will see some bumps along the road
  • 00:18 as as we heard that it is
  • 00:20 quite overboard at the moment.
  • 00:22 Of course we have some options expired today that could end up being
  • 00:26 a little bit of of breather for the market.
  • 00:28 But we don't think this is anything material to worry about because the long term story remains intact,
  • 00:33 remains intact.
  • 00:34 But but the earnings momentum can only can only go for so long.
  • 00:38 Do you have visibility on when that might snap or when at least might even slow down just a touch?
  • 00:43 I think the expectations need to moderate somewhat.
  • 00:45 What we are looking for is
  • 00:47 the big CapEx
  • 00:49 expenditure that's coming through on the mega, on the mega caps are really going to filter through to a lot more of the supply chain.
  • 00:56 So the next move, what we're looking for in the tech space is how that AI supply chain really starts to join those mega caps rather than the mega caps falling towards the rest of the market.
  • 01:08 What do I do right now?
  • 01:09 I've got a lot of political risk.
  • 01:10 I'm trying to figure out what the uncertainty is going to do to My Portfolio over the next few months.
  • 01:14 Do I forsake
  • 01:17 the high performing tech sector and build a diversified portfolio and accept the underperformance?
  • 01:22 I'm trying to ask everybody this question right now, trying to understand how people are thinking about their portfolio construction.
  • 01:28 I think it's
  • 01:28 an interesting time to start looking at broader parts of the market.
  • 01:31 What we are seeing is earnings revisions across the market away from those mega cap
  • 01:37 stocks start to improve.
  • 01:39 Now the multiple needs to be
  • 01:40 raised in those stocks.
  • 01:42 And what is required for the multiple to be raised is I think a little bit more clarity on what we're going to get on the rate side.
  • 01:48 So whether it's in Europe, whether it's in the USA, little bit more clarity on when and how much the Fed is going to
  • 01:54 drop the rates.
  • 01:55 And that's going to, I think give the market much more confidence in re rating the rest of the market because earnings are improving and that's a good sign.