A deep Fangs bite could be painful for global stock markets

London

FANGS, the group nickname for Facebook, Amazon, Netflix and Google shares, have been wild performers this year. Adding Apple and Microsoft to the foursome, the market capitalisation of the stocks comes to an astounding US$3 trillion. If the tech and new media group fall for any reason, the impact could be global. Their market cap is now higher than the entire values of the German and French stock markets, according to exchange data. The level of the fashionable six shares is only US$1 trillion lower than the market cap of all shares traded on the historic London stock exchange. With the exception of China and Hong Kong, their total market value dwarfs individual Asian stock markets, including Singapore.

Hedge funds and other fund managers have poured money into these stocks and thus have record overweight holdings in technology, according to nine year data of BOA/Merrill Lynch. The buying momentum caused their prices to soar this year. So much so their boom accounted for more than a third of the S&P 500 year to date gains of 8 per cent. To be sure, if all high flying tech and media stocks were excluded from the S&P, the index's gains would be a mere one per cent.