Aussies seek tech investments – but is it time to look beyond the safe havens?

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August 18 2020
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Australian traders are moving their money to the safety of big technology companies, but the returns could be short-lived, an industry expert has said.

Aussie fintech Stake has seen a 92 per cent increase in Aussie traders trading Apple in the last two weeks, compared with the previous two weeks, and saw volume of trades increase 192 per cent, or $5.5 million, on its platform.

All this is being seen as Apple announced its stock split, and for popular stocks like Apple, the lower share price makes it attractive to investors who couldn’t afford higher share prices but want to own a piece of the company.

However, EFT Securities CEO Kris Walesby has questioned whether it’s time for investors to look beyond the safe havens of the tech companies.

“Tech stocks have been strong for some time now, with the Nasdaq up 15 per cent this year, while the Dow is slightly down for the same period,” he said.

Mr Walesby noted that investors who have experienced gains from the tech sector could look into other sectors if they are looking to continue to grow their portfolios.

“Precious metals continue to hold appeal as a hedge against market volatility. Gold pushed through the all-time high mark recently and is likely to maintain value for some time due to quantitative easing programs across the globe and ongoing risks from COVID-19.

“Silver has traditionally followed gold closely and may be set for market interest as investors look for alternatives to gold. Other resources also continue to be in demand. For example, iron ore reached 12-month spot price highs in recent times and there has been recovery in oil prices,” Mr Walesby noted.

He also pointed to the healthcare sector, particularly biotechnology, which has benefited during the COVID-19 pandemic.

“While investors have focused on those companies working on COVID-19 vaccine exploration, there are still opportunities through companies covering everyday needs, such as vitamin or painkiller manufacturers, to those covering serious diseases and illnesses – for example, immunotherapy treatments or medical equipment like ventilators,” he noted.

A third sector investors can look at is consumer staples companies with essential businesses less likely to be impacted by lockdowns.

“For example, consumers continue to need and purchase groceries, so companies like Coles and Woolworths are able to continue operations largely unaffected,” Mr Walesby said.

“Similarly, investors could selectively look at infrastructure companies, such as energy providers, as a buffer against volatility. In the current situation, many individuals have seen their reliance on essential infrastructure, such as for energy, water or internet, increase as they spend more time at home.”

Investors who are looking for stronger long-term growth have also been advised to look at technologies of the future.

“Another way to look at energy is the renewable energy and electric vehicles sector, also a growing market and becoming increasingly accessible and affordable. Battery technology is central to this growth and also established technology with continued innovation,” Mr Walesby said.

The ETF provider also advised investors to avoid potential traps of buying the fall, with certain sectors still likely to suffer due to the COVID-19 pandemic.

“Of course, at some point the ‘pandemic sector sufferers’ – the stocks that lose the most during the pandemic – such as travel, leisure, oil, personal services, banks, real estate will look attractive; however, we don’t think we are there yet,” Mr Walesby concluded.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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