South African investors focused on the local market were reminded this week of the opportunities they miss out on when they don’t look at global heavyweights.
Earlier this week technology giants Apple and Yahoo both jumped on the back of good news which took the market by surprise.
Apple came in ahead of analyst consensus earnings forecasts when it announced that it had sold a staggering 74.5 million iPhones – up 46% from the comparable period last year – where analysts were only expecting 65 million units to be sold. “The results were littered with records like AB de Villiers and a Wanderers one day match,” chirped Sasha Naryshkine from asset management firm Vestact.
Apple’s cash sits at a whopping $178 billion giving it the capacity to buy other major players outright including Disney and Facebook – the world is literally the oyster of this business.
Yahoo has been less of a success story having struggled to reinvent itself under the guidance of CEO Marissa Meyer. However it did have one “ace in the hole” which it has managed to use to underpin its valuation. The company has retained a 15% stake in Chinese e-commerce giant Alibaba. The meteoric rise of the Chinese player has driven up the valuation of Yahoo and earlier this week the US search engine giant announced it intended to dispose of its remaining stake for approximately $40 billion, a move which would be done through a favourable tax structure.
Both Apple and Yahoo share prices surged this week and these incredible cash war-chests highlight the value of being able to participate in the fast-paced US technology sector.
While he described Apple as an “average stock” Peter Garnry, head of equity at Saxo Bank, made the comment that: “For the first time Apple is the market leader in China, testament to the rise of the Chinese middle class and wage growth in China because despite quality competition from the likes of Xiaomi, Apple now sells more phones to Chinese customers than Americans.”
Garny shares his views on Apple here.
Investors looking for offshore technology exposure but not keen on picking individual stocks may want to take a look at the iShares Nasdaq 100 Exchange Traded Fund (ETF) which is available through local service providers including Standard Bank’s WebTrader platform. The five biggest components of this ETF are Apple (14.3%), Microsoft (7.8%), Google (3.94%), Facebook (3.78%) and Intel (3.7%).
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