Tech companies have made headlines for all the wrong reasons over the past weeks with some FANG stocks (an acronym for Facebook, Amazon, Netflix and Alphabet’s Google) coming under severe market pressure.
Whilst these stocks are expensive relatively to the wider market, their strong growth in earnings has arguably also supported the success of the overall US equity market relative to the rest of the World. Therefore, any negative news raising doubt on the sustainability of FANG’s growth potential has the potential to negatively affect the wider market.
With forward PE ratio fort he US market ar a cyclical high, investors could be tempted to seek better value growth outside the US. A similar trend to this materialized towards the en of the last cycle.