UK’s tech stocks outperform main market by 19 per cent
Interest in technology stocks has piqued during the pandemic and are now outperforming their FTSE peers, according to exclusive data shared with City PM
The FTSE techMARK 100, London’s technology index, rose seven per cent last year as the FTSE floundered and shed 12 points, research by Bowmore Asset Management shows.
After what has essentially been a year of lockdown restrictions, UK technology stocks are reaping the benefits of a shift in consumer habits.
Its US counterpart, the Nasdaq 100, jumped an impressive 40 per cent compared to a 17 per cent rise in the S&P 500. It contains some of the pandemic’s biggest winners including Amazon, Apple and Netflix as well as Docusign, which has seen shares treble over a year.
The FTSE techMark consists of tech firms listed on the main market but Aim-listed companies like Asos are not included in the index. It is less prestigious than Nasdaq in large part because many listed UK firms have been the subject of large takeovers recently, including chip designer and Inmarsat, the satellite telecoms provider.
“The performance of tech shares has been one of the rare bright spots in the coronavirus crisis. However, the outperformance of US listed tech shares vs those in the UK brings the small size of the UK tech sector into sharp focus,” Charles Incledon, Client Director at Bowmore Asset Management, said.
It raises further questions about how the City can attract promising startups to list in London rather than New York.
The Treasury will soon publish its review into an overhaul of the listing rules. One obstacle for companies looking to list is the perceived difference between its premium and standard categories, which have varying governance standards.