How will technology trends develop?

Technology trends continue to evolve

The environment for technology stocks was poor

The mood among technology fund investors is currently still negative. Massive overcapacities and weak demand led to poor performance in technology stocks. Technology equity fund outflows in the United States in 2001 were approximately $ 3 billion. In 2002 that figure rose to over $ 5 billion. The result was inevitably further sales by the fund managers who had to keep the liquidity available in their funds for the exiting investors. Of course, the accounting scandals and the danger of military conflicts in the Middle East led to further uncertainty. How is the technology sector to be assessed fundamentally?

Technology trends continue to evolve

In contrast to the stock market situation, the most important technology trends are developing positively. Due to the extremely high UMTS license fees in Europe, this future-oriented technology almost became a negative trend. At the very least, it brought a number of telecom providers to the brink of bankruptcy. Jim Hansel, technology fund manager at UBS in New York on the potential of 3rd generation mobile services: "Unlike in Europe, 3G services are very successful and popular in Korea and Japan. The successes are already visible even in the USA." Another growth area remains e-commerce.

Strong sales growth characterizes the development of the big market leaders. Jim Hansel: "Amazon, eBay and Yahoo! are clearly among the 'survivors of e-commerce' and will be able to expand their dominant market position over the next few years and use it for further sales growth. We are also monitoring developments very closely in the field of nanotechnology. Es there is currently no efficient way to invest in companies in this segment. There is little overlap with the biotechnology sector. "

Life with the technology cycle

A similar phenomenon has been observed over and over again over the decades. For example the market launch of PCs in 1982, the development of Windows and CD-ROMs in 1991, networks in 1993 to GSM cell phones from 1995 and above all the Internet in 1999 and 2000. Jim Hansel: "Die The performance of the technology indices clearly shows that new technologies are not noticed at all at the beginning and then very often develop extremely quickly into euphoria.This exaggeration was not only observed with the introduction of the Internet. Expectations become more realistic and technologies then very often move on a steady growth path that is in line with technological advancement. But this phase also harbors risks. Market positions of companies can shift, prices fall dramatically and technologies are threatened by new innovations . "

Moderately positive performance expected

Jim Hansel, UBS, expects moderately positive returns in the global technology sector over the next few years. After the extremely good years 1998 (+67.5%) and 1999 (+130.8%), the third year in a row is now experiencing a clearly negative performance (2000 -39.6%, 2001 -28.5% and ongoing . 2002 -40.5%). A comparative analysis shows that the UBS (Lux) Equity Fund - Technology - has outperformed the competition in positive periods in the last 3 years and was in the middle of the field in negative years.

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