April 19, 2021

An increasingly technological future

An increasingly technological future


Very few can deny that every time we live more "connected" and that technology has been made little by little with an important gap in our lives. And since the beginning of the century, technology companies have been gaining such prominence that currently four of the five most valuable companies in the world are linked to this sector. The evolution of the Internet and mobile devices has led to companies that scarcely ten years ago did not exist, to be part of our lives and with this to grant them a dominant position in the financial markets.

This type of companies have managed to change our day to day, to the point of making Spaniards devote an average of more than five hours a day to surfing the net. The impact in other countries is even greater, for example in the US no less than 60% of online purchases are made through Amazon. The other technological phenomenon, social networks, have generated a new way of communicating and make especially young people empower companies according to their consumption preferences without even realizing it.

While Facebook struggles to keep us more "connected" minutes, other companies such as Netflix have managed to minimize piracy and compete with the main pay-TV services. Google continues to dominate Internet search services and Apple maintains more than 15% of the phone share, and has a cash available equivalent to the stock market capitalization of Inditex, Santander and BBVA together.

Traditionally, investors have used leading indicators to anticipate economic cycles. References such as housing licenses, car sales or the price of raw materials help investors take the pulse of the economy. However, given the great growth of the express technology and the great impact that these have on the population, it is possible that not too distant future, investors pay more attention to the quarterly sales of Amazon or the decreases in the Netflix subscriptions to try to anticipate an economic slowdown, in what are the new habits of consumers.

The growth of this type of companies has been so vertiginous that while in the last decade the Dow Jones has risen 272%, and the S & P500 283%, the Nasdaq 100 that encompasses the 100 largest companies in the technology sector has been revalued 524% In fact, the companies known as FANG, Facebook, Amazon, Netflix and Google accumulate 90% of the growth in capitalization of the S & P500 from 2015 to the present day. While the FANG have increased 630,000 million euros its capitalization the rest of the index has done so in only 45,000 million dollars.

XTB in its eagerness to try to offer its clients the widest range of investment opportunities and the most innovative financial assets, has included within its product offer the possibility of investing through a CFD based on the Fang + Index recently created by Intercontinental Exchange and whose futures are listed on the NYSE. This instrument will be available in the xStation under the name USFANG.

This index, in addition to being composed of the main technology companies such as Facebook, Apple, Amazon, Netflix and Google, includes other relevant companies in the sector such as Twitter, Nvidia and Tesla, as well as the most representative of the Chinese market such as Baidu, Alibaba and Tencent. The selective one gives the same weight to all the actions, so it is not necessary to make daily adjustments.

The FANG + index has benefited a total annualized return of 23.48% from September 19, 2014 to January 18, 2019, compared to a 13.64% of the NASDAQ-100 and 14.96% for the S & P 500 in the same period. This behavior justifies the idea that this type of companies is experiencing a sustained growth greater than the whole of the technological sector in the United States.

Although there are few who at some point spoke of bubble in the sector of the FANG, the reality is that the greatest growth of turnover of these companies is in line with that stock market differential that we have pointed out. Therefore, we can conclude that, while it is true that the contributions of the FANG discount greater future benefits, we can not deny that the yield differential with respect to the Nasdaq in these five years has been explained by a higher growth than the whole of the selective. In the words of Gustavo Martínez, Head of Sales of XTB Spain, "this new index comes to complement the demand created by our customers in recent months, who requested a product that would allow them to invest in first-class technology companies at a very moderate cost. " The new USFANG product will be available from February 4 for all XTB customers under the USFANG ticker, with a trading schedule of 15:30 to 22:00 Spanish time.

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