Thursday 12 January 2023

*UKHotViewsExtra* Share performance in 2022

2022 was a bruising ride for tech. It was a year which brought war to Europe and the beginning of an economic downturn in many regions. And in that context, it is perhaps not surprising that investors discounted the technological future in favour of more conventional industries, such as commodities and defence.

2022 chartThe tech-heavy US Nasdaq closed 33% down year-on-year (YoY). The guessing game of how fast the Federal Reserve would increase interest rates to combat rising inflation caused much of the volatility visible in the chart. Further rate hikes are expected, although there are signs that US inflation is easing. The December 2022 figure just published is the lowest since October 2021.

On the face of it, the FTSE Software and Computer Services index (SCS) appears to have fared rather better, dropping 21% YoY. But bear in mind the string of takeover offers for many of its major players, with a weakened sterling increasing the attractiveness of UK acquisitions. Investors jumped into those stocks, giving a boost to the index.

Share price tableThe FTSE 100 closed up 1% YoY. Its commodity and energy giants benefited from the post-Covid reopening and the geopolitical fallout of 2022. And many of its constituents have dollar-denominated revenue streams, which appreciated with the weakness of sterling, boosting profitability.

The other specialist technology and media indices we track reflect the same story of volatility during a year which ended squarely in negative territory for all.

In fact, of the 150 or so stocks we track, only around 20 managed to post a gain in share price over the year.

HVP logoThis might all look like the end of a golden age of tech investing. But in fact, the picture is more subtle. And whilst the stock market troubles of the biggest tech names might seem a world away for many of us, there are some useful lessons in the challenges they faced in 2022.

UKHotViews Premium readers can read more on 2022 and what may be in store for 2023 in Share Performance in 2022: the year tech fell (closer) to earth. And if you would like to discuss subscription options, please contact Deb Seth.

Posted by Tania Wilson at '14:35' - Tagged: markets   macro