Market

A look inside Europe’s $7 trillion technology market

There’s no doubt US tech stocks have thrived in 2020, but a raft of their European counterparts have returned huge profits for investors during the first six months of this year.

Sinch, the Stockholm-based cloud telecoms firm, is up a teeth-kissing 170% year-to-date. Second-best is Dutch fintech play Adyen: its market cap grew from $223 billion to $389.4 billion, driving its stock price up by 74%.

The NASDAQ 100 (NDX) is commonly used as a benchmark for the US tech industry. 17 tech firms in Europe have outperformed the NDX this year.
The NASDAQ 100 (NDX) is commonly used as a benchmark for the US tech industry. 17 tech firms in Europe have outperformed the NDX this year.

Swedish accounting gem Fortnox just beat Germany’s TeamViewer for third place, but they were close, both up around 52% in the past six months. It’s far less than its US counterpart Zoom Video, but still impressive.

Dutch tech stocks lead Europe in 2020

In a bid to map Europe‘s 6.12 trillion ($6.95 trillion) technology market,

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Cyclical Stocks Have Led Market Recoveries

Key insights

  • If economically sensitive stocks lead the market recovery, as we expect, history would repeat itself.
  • Many cyclical companies, such as global industrial conglomerates, capital-rich banking institutions, and travel & leisure companies, should experience a substantial rerating.
  • With over 50% of the ACWI index invested in the lowest Covid-19 beta sectors, passive index investors appear to be underexposed to upside recovery.

“People should value manufacturing–the world of atoms vs. the world of bits–far more. It is looked down upon by many, which is just not right.” -Elon Musk

Although less controversial than some of Mr. Musk’s recent tweets, markets appear to disagree with his tribute to the physical over the digital. This year-to-date’s sector winner in the MSCI ACWI Index (“ACWI”) is information technology, with software & services devouring the world of atoms. In the volatile first five months of 2020, these companies trafficking in bits rose nearly 10%,

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