The effects of Google's decision to break its relations with the Chinese trademark Huawei have generated great concern among small and medium investors. Given the impact that the application of this measure may have on the equity markets. For now, all technological values have depreciated significantly in international trading floors. With very violent falls and that in some cases they have been higher than 5%.
Despite the fact that Huawei has tried to calm the financial markets by stating in its statement that "it will continue to provide security updates to the existing models of this trademark, both in its mobile phone format and in tablets." Although it has not had the soothing effect that could be expected in the equity markets. Sowing doubts to the entire international technology sector that has been very severely punished and where sales have been imposed with crystal clear on purchases.
In the selective index of national equities, the Ibex 35, securities of these characteristics are not listed. But they have been precisely those most linked to new technologies the most punished at the beginning of the week. Where it has been led by Indra that a little more than 5% has been left in the valuation of its price. While small and medium investors have looked to the most traditional values to take refuge in these precise moments. Beyond other technical considerations and maybe also from the point of view of its fundamentals.
Huawei weighs on the values of the sector
The decision made by Google has led to the declines being generalized in all stocks in the technology sector. With hardly any exceptions and in many cases plummeting in one of the worst trading sessions of the year. Where the technology index of the United States, the Nasdaq has been left around 2,50%, while here in Spain, the Ibex 35 has dropped just over a percentage point. In anticipation of what may happen during the rest of the week that will be conditioned by this relevant news that has led to Google's veto of Huawei.
The effects of this decision have gone beyond the financial markets of China and United States. To the point that they have affected all the technological values in the rest of the world. Faced with this scenario, the money has gone to other more defensive and calm sectors. For example, electricity and companies related to food. In this sense, it is necessary to highlight the role of companies such as Endesa, which in a very negative stock market environment have come to appreciate around 0,20%. In a clear investment strategy that investors have taken to protect their capital available in the stock market.
What can investors do?
Faced with this scenario presented by technological values in all international markets, the best that small and medium investors can do is absent from these proposals in investment. At least in the short term and even to see how its evolution will be from now on. Not surprisingly, the volatility presented by this stock market is currently very pronounced. Very conducive to carrying out trading operations due to the high difference between its maximum and minimum prices. To take advantage of these movements in the equity markets very quickly.
While on the other hand, you cannot forget that the technology sector is one of the most risky in the operations carried out by retail investors. Where you can earn a lot of money, but for the same reason leave a lot of euros on the way. Of course, it is not a comfortable stock market sector to be invested at this precise moment. And much less to develop a stable stock market for the medium and long term, which is the main objective of the most conservative investors. They have other values that are much better suited to their investment profile.
Opt for other stock sectors
Given the scenario presented by technological stocks this week, there is no doubt that one of the best investment strategies is to target other less conflictive sectors. Where you can take advantage of spike or bounce of the main international equity indices. Where even real business opportunities can emerge that must be taken advantage of by small and medium investors. Although with great caution before what can happen in the bags from these precise moments.
On the other hand, it should also be noted that the values of the technology sector are to some extent overrated. In the sense, that they have experienced strong increases in their prices in recent years. To the point that many of them are in positions of all-time highs. This fact, about Google's veto of Huawei, may be the pretext to initiate corrections in the financial markets. Although it is not known to what levels this great movement can take that is formed these days.
Wait for the return of the holidays
If for any reason you want to be positioned in one of the values of the technology sector, the best possible strategy at this time is to wait until the return from the long-awaited summer holidays. On those dates already it will be known what the real effect has been of this important measure in technological devices. So that in this way, small and medium investors can decide whether to enter the positions of these companies or if, on the contrary, it is still better to be absent from these positions. But always from a thoughtful approach that takes into account the general context of international equity markets.
On the other hand, it cannot be forgotten that the technology sector is not a very sensitive segment to offer high dividends to shareholders. If not, on the contrary, it is a payment that is rather limited since it barely exceeds 3% in the best of cases. That is to say, they are not values to save, but rather to make speculative investments and in very fast periods of time. Even in movements developed in the same trading session due to the strong volatility in the configuration of their prices. This is an aspect that will undoubtedly have to be taken into account from now on and beyond other considerations in investment strategies.
Prices can stabilize
In the shortest term, it is true that the values of the technology sector can stabilize. But the important thing is what can happen next. That is, starting next week and depending on other variables, such as the electoral results of the european elections. Of course, it will not be an easy decision to make from now on and where many mistakes can be made in the strategy to be developed. Something that can happen to you these days with some frequency and that can lead to very unwanted situations for your investment interests.
In this environment, it will be very different if your investments are focused on the short term or if on the contrary aimed at the medium and long term. Because there is no doubt that they will need a different treatment in the strategy that you are going to carry out from now on. In other words, your room for maneuver will not be very high due to the special characteristics of the situation in international equity markets. With what the risks are significantly greater and that can give you the keys about what you have to do or not from now on.
Protect positions on the stock market
In short, it is a new scenario that emerges for small and medium investors and that they will have to deal with at the time of build your next investment portfolio. In some cases, changing the values and in others simply modifying only some stock market proposals. So that in this way, you can make your savings profitable in a more efficient and above all profitable way to defend your personal interests. As well as being attentive to everything that may happen in the second half of the year. With all the variables that may arise from this scenario that arises in this part of the year.
Where in the end it is about that you can improve the balance of your savings account in each trading year. Knowing at all times that things will not always turn out exactly as you wish. Something that will be needed from now on since investments in the equity markets are not going to be easy to put into practice. To the point that you can make the odd mistake.