Stocks in British technology firms slid in early trading on Friday after the NASDAQ index lost over 3% in New York, its worst session performance since late 2011, in the wake of fears of an impending tech stock bubble.
Semi conductor maker ARM reversed 3.6% as software firm Sage dived 2.5%. Mobile banking firm Monitise went down 3.2% as Fashion retailer Asos lost 3.4%.
New entrants into the UK stock market suffered losses too, according to The Independent. JustEat, an internet-based food service, slid 3.8% lower than its IPO price last week. Electrical firm AO World plunged 2%.
US stocks took their heaviest pounding this week and affected investor sentiments in London. Facebook went off 5.2% as Amazon shed 4.4%. Google lost 3.3%, with Twitter diving 2.7%.
“There was no particular catalyst. Maybe it’s investors doing a double-take and saying, ‘Crikey, that’s expensive.’ We’ve said since last summer that the sector looked pricey,” George O’Connor of brokerage firm Panmure Gordon said.
Valuation of stocks had surged to more than 100 times the value of underlying earnings, with analysts perceiving them as being “astronomically high”.
The valuation concerns elicited mixed responses in London’s IPO market, with advertising tech company Matomy Media pulling its initial public offering. But Eagle Eye, a digital voucher firm, was able to generate 6 million pounds this week.
The UK’s benchmark FTSE 100 Index closed at 6,561.70 points on Friday, after shedding 80.27 points or 1.21%. The index has slumped about 2.8% this year, as Reuters report.
Hargreaves Lansdown was among the worst performers in the FTSE 100. The Financial services company lost 5.1%. Traders attributed the fall of the firm that’s also involved in investment management to Morgan Stanley’s reduction of price target for the shares.
Superficial valuations are deterring investors from injecting more of their money in equities. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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