Higher interest rates don't mean tougher times for tech
Historically, tech has outperformed the broad market when yields climb. And at this point, multiple other forces dictate tech's run isn't done
Add BT as a preferred sourceWHENEVER yields tick up, the notion that rising long-term interest rates will upend tech's global bull market leadership swirls wildly. Yet, historically, tech has outperformed the broad market when yields climb. And at this point, multiple other forces dictate tech's run isn't done.
Linking tech to interest rates stems from a valid but overly simplistic theory: higher rates reduce the net present value of future earnings, shrinking what investors should pay for companies' future profits - all else equal.
Since sparkly far-future profit projections underpin tech's premium valuations, many believe rising rates should wreck them. They tout economically sensitive value stocks - such as Singapore's financials, real estate and industrials - for such periods.
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