An analyst points out that no one who wins the presidential election, policy risk for tech stocks goes away – but Joe Biden can mitigate the risk of an increase in tech supply chains for the presidency, a Donald Trump term Let us explain.
Technology Select Sector SPDR ETF
(XLK) has dropped 10.5% during the last three weeks, which is worse than the loss of 6.7%
That period coincides with technical income, which has been good, but they have not mattered as the center stage of elections and other political issues.
If investors win the Biden election, then investors focus on the potential for higher capital-gain taxes, and some investors may want to lock in their profits on the technology beyond that. There is also concern that the Blue Wave may mean more retaliatory action, which is some of the blame for external instability in larger technology.
But like tech companies, Biden’s win may be less bad
(CSCO) and semiconductor companies say Wesbush is analyst Dan Ives. Apple, in particular, is “betting the farm” on its Foxconn factory, says Wesbush Securities Ives, and it could take years for Apple to move 10% of production versions from Foxconn. In addition, with nearly $ 20% of iPhone sales stemming from its $ 160 billion annual iPhone revenue stream from China, there has been some risk surrounding a possible Chinese consumer boycott of Apple products during Trump’s presidency, though that risk has so far Is physical.
For semiconductors, a Biden presidency could mean less focus on Huawei, and it would be beneficial for companies like Companies
Taiwan Semiconductor Manufacturing (TSMC).
“Based on policy platforms, Street’s approach appears to be that a Biden presidency will take a relatively soft tone on China technology and policy issues, which may calm tensions and rhetoric between the US / China in the enterprise and consumer technology ecosystem , “Ives writes.
The point: Late Tech’s poor performance has been pricing in a lot of headwinds, but a little easing in relations with China under Biden may help.
Write Yakub Sonshine at [email protected]