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Johannesburg - Technology stocks have given investors a
total return of 33.9% for the year to date‚ compared with 5% for the FTSE JSE
All Share [JSE:J203] index‚ said Andrew Newell‚ head of business development at
Cannon Asset Managers.
The asset management company has‚ however‚ warned that not
all information technology companies within the JSE are good investments‚
as some trade on more demanding multiples than others.
“The FTSE-JSE technology index has returned almost 54% per
annum on average over the past three years‚ against the FTSE-JSE all-share
index (ALSI) return of 21% per annum‚ over the same time period‚” Newell said.
Looking ahead‚ he said despite the sector’s strong
performance, it remains attractively priced.
“However‚ investors ought to exercise caution‚ as there are
a number of companies within the IT sector which appear to be fully priced.
"Naspers is a case in point‚” he said.
“Despite being commonly recognised as a broadcasting or
media stock‚ the majority of the company’s market capitalisation is explained
by Chinese-based Tencent‚ an internet and gaming firm that is being priced
euphorically.”
Elements of the IT sector would continue to deliver results over the medium and long term‚ Cannon Asset Managers forecast‚ amid an environment of growth being increasingly driven by a greater use of information technology and systems.
