Credit Suisse's Love for Tech Stocks Unfazed by Facebook Crisis
(Bloomberg) -- As a bet on the future of everything, technology stocks are too cheap to pass up. Even after last year’s epic rally and the uproar over Facebook Inc.’s handling of personal data.
So says Credit Suisse Group AG’s chief investment officer Michael Strobaek, who lists robotics, artificial intelligence and automation among "super trends" with the biggest investment potential.
Here to Stay
"It’s not a bubble like in 2000," said Strobaek in an interview in Hong Kong, “Tech is not expensive, tech is growing fast, tech can continue to grow even with rising interest rates, and tech is here to stay."
For a valuation case on global tech, Strobaek’s looks at share prices relative to analyst forecasts for earnings over the next year. He finds those forward multiples are right where they’ve always been versus the market as a whole, excluding some extreme stretches like the dot-com bubble. With companies boosting spending on technology at a rate that could surpass global growth, the industry remains appealing.
Facebook’s travails may spur a review of business models -- and that’s not a bad thing, he said. Regulators will pay more attention to how firms deal with people’s private data, but tightened policies could make businesses "more sustainable, more defined," according to Strobaek, who sets investment strategy for Credit Suisse’s $1.46 trillion managed assets.
One place where tech stocks are less cheap is China, going by price-earnings ratios in absolute terms, but companies there hold distinct advantages, said Credit Suisse global equity strategist Andrew Garthwaite in a separate interview.
"You got the Great Firewall that protects you from foreign competition," Garthwaite said, "There is much less concern about data security."
With great opportunities come new challenges. Strobaek, who’s favorite movie is Ex Machina -- a 2014 sci-fi thriller about a humanoid A.I. -- believes in the long run people will be challenged ethically and morally by technology they’ve created. "You can’t stop it, so you better now get a grip on it before it goes to fast," He said.
Credit Suisse is bullish on global stocks and advises clients to hold 45 percent of assets in them. "Signs of bull market still exist," said Strobaek, particularly in earning. Inflation, "an elephant in the room," may cause a market correction, but would only become a problem if U.S. wage growth rises above 3.5 percent, he said.
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