Technology stocks proved to be safe-haven stocks during the pandemic, as the importance of these products in maintaning productivity fell even more sharply into focus. But 2021 has not been as kind to the Nasdaq as 2020. The reason--and what Wedbush analyst st Dan Ives says represents the biggest threat facing technology stocks--is the growing tensions between the U.S. and China.
According to a Monday note from Wedbush analyst Dan Ives, the Biden administration has taken a "much firmer stance" on intellectual property theft and U.S. istings of Chinese stocks than Wall Street had anticipated. Any hope that, with Donald Trump out of the picture, investors in companies caught in the crossfire --Alibaba, Baidu, Tesla, Apple, to name a few--could exhale, is now all but lost. Biden is not just continuing Trump's policy of pressuring Beijing but is argubaly increasing it. The biggest threat to Chinese U.S.-listed stocks (a law signed by Trump that would delist Chinese companies unable or unwilling to be meet U.S. auditing standards) remains on the books and will be pursued by the Biden Administration.
"This complex rubik's cube geopolitical battle is worth at least a 10% negative overhang on the NASDAQ/tech sector currently as white knuckle fears around rising tensions between the US and China is starting to grow again on the street," Ives said in the note.
But not just Chinese companies will suffer; U.S. companies that rely heavily on Chinese consumers and the Chinese market area also at the center of this delicate dance.
Apple, Tesla, Cisco are just some of the companies that could suffer, according to the note. (Beijing recently restricted Tesla's technology on its military vehicles on fears of potential spying.)
While other factors like rising interest rates and fears over anti-trust crackdowns have also helped lower the Nasdaq the uncertainty ahead between Biden and President Xi are what have analysts like Dan Ives most concerned about when it comes to big tech stocks, both Chinese and American,