Shouldn’t we all just buy ASX tech shares from now on?

Tech shares of all stripes have done remarkably well since the S&P/ASX 200 Index (ASX: XJO) market bottom – but it’s easy to forget just how well.

Since 23 March, the ASX 200 has risen approximately 28% (even after today’s falls). But since the same date, the S&P/ASX All Technology Index (ASX: XTX) is up nearly 70%.

Just look at shares like Afterpay Ltd (ASX: APT). Its shares have been truly phenomenal to watch over the past 2 months. After bottoming out at $8.90 on 23 March, Afterpay shares were at an all-time high this week, hitting $54.85 at one point. That’s a return of more than 500% – sensational stuff!

It’s a similar story over in the United States for tech shares. Since 23 March (also the US market bottom), the Dow Jones Industrial Average has risen roughly 35%. But if you look at US tech shares like Apple (up nearly 50% since 23 March), Mastercard (up 43%), and Facebook (up nearly 52%), we can see a similar story playing out.

So should we just give up on the blue chips of the world in favour of ASX tech shares? By blue chips, I’m referring to the likes of Commonwealth Bank of Australia (ASX: CBA), Woolworths Group Ltd (ASX: WOW) and Telstra Corporation Ltd (ASX: TLS). 

A bull case for ASX tech shares

Well, I think to ignore tech shares is to do so at our own peril. These are the companies that are shaping the future of business in my view. Thus, I think it’s imperative to at least consider some tech shares like Afterpay, or maybe Altium Limited (ASX: ALU) or NextDC Ltd (ASX: NXT) for one’s portfolio. If you’re aiming to build your wealth through ASX shares, you’ll want to find at least some companies that are growing quickly – and there’s nowhere better to find such companies than in the tech space, in my view.

If you’re not confident investing in individual ASX tech shares, you can always look at exchange-traded funds (ETFs) instead. The Betashares Nasdaq 100 ETF (ASX: NDQ) is a great place to start. You can also have a look at the aptly tickered ETFS Morningstar Global Technology ETF (ASX: TECH).

In saying this, I also think it’s a mistake to tar all ASX tech shares with the same brush. Like any other sector, there will be winners and losers. For every Afterpay, there’s another tech company with a ‘brilliant idea’ that won’t make it off the starter’s block.

Furthermore, investors shouldn’t forget that having a diversified portfolio is always important. And only investing in tech isn’t diversified at all. The tech sector isn’t immune from the vicissitudes of life and faces some unique risks that merit the same level of balanced diversification as any other sector in your portfolio.

More reading

• Keep a watch on these 3 ASX trends next week
• ASX 200 down 2.2%: Westpac tumbles, TPG reveals special dividend plans
• Estia Health share price tumbles after being cut from the ASX 200
• ASX 200: improved consumer sentiment to near pre COVID-19 levels
• 3 ASX 200 shares to buy and hold for decades

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Facebook, Mastercard, and Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook and Mastercard. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Altium, and ETFS Morningstar Global Technology ETF. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS and Telstra Limited. The Motley Fool Australia owns shares of Woolworths Limited. The Motley Fool Australia has recommended Facebook and Mastercard. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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As the market pulls back from recent highs I expect these 3 ASX trends to feature prominently next week. 

Index rebalancing

S&P Dow Jones Indices has announced its quarterly Australian rebalancing. This cyclical ASX trend will bring several new Australian companies to prominence with foreign investors. In addition, dropping others at the same time. This provided a window for Seven Group Holdings Ltd (ASX: SVW) to take a significant stake in Boral Limited (ASX: BLD) last week. 

Some of the more interesting changes are that mid-cap defence manufacturer, Electro Optic Systems Hldg Ltd (ASX: EOS) has been included into the S&P/ASX 300 (INDEXASX: XKO) and the S&P/ASX All Australian 200 (INDEXASX: XAT).

Also, lithium miner, Pilbara Minerals Ltd (ASX: PLS) has been removed from the S&P/ASX 200 (INDEXASX: XJO). I think this marks a return to sanity amongst lithium investors.

The gold boom never stopped

In a typical ASX trend over the past two days, investors are rushing back into gold shares.

Yesterday the 4 largest advances among large-cap shares were Northern Star Resources Ltd (ASX: NST), Newcrest Mining Limited (ASX: NCM), Saracen Mineral Holdings Limited (ASX: SAR) and Evolution Mining Ltd (ASX: EVN) in that order.

From today I expect to see large inflows into gold mining shares again with lower tier. During the last mini-boom, one of the big winners was Gold Road Resources Ltd (ASX: GOR).

The major ASX trend: travel and tourism 

As sentiment turns there is a clear pull back from those companies that stand to benefit from open economies. Air New Zealand Limited (ASX: AIZ) share price has seen consecutive falls by 7% on Wednesday and 9.5% on Thursday.

Likewise Scentre Group (ASX: SCG) in the real estate sector has seen share price falls of 4.4% on Wednesday and 8.1% on Thursday. Furthermore, the market is becoming increasingly sceptical about Australian real estate investment trusts (A-REITs), focussing on those with exposure to shopping centres after the GPT Group (ASX: GPT) announcement of a devaluation in their retail assets. 

Foolish takeaway

The market remains very febrile in the current economic environment. This will provide buying opportunities for those with the patience and nervous disposition to sit through any upcoming volatility.

More reading

• Tech shares! Should we even invest in anything else?
• ASX 200 down 2.2%: Westpac tumbles, TPG reveals special dividend plans
• Estia Health share price tumbles after being cut from the ASX 200
• ASX 200: improved consumer sentiment to near pre COVID-19 levels
• 3 ASX 200 shares to buy and hold for decades

Motley Fool contributor Daryl Mather owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia owns shares of and has recommended Electro Optic Systems Holdings Limited. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Keep a watch on these 3 ASX trends next week appeared first on Motley Fool Australia.

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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) is on course to follow the lead of U.S. markets and record a sizeable decline. The benchmark index is currently down 2.2% to 5,830.5 points.

Here’s what has been happening on the market today:

Westpac AUSTRAC update.

The Westpac Banking Corp (ASX: WBC) share price is trading notably lower again on Friday. As well as being caught up in the market selloff, an AUSTRAC update could also be weighing on its shares. This morning Westpac revealed that AUSTRAC is further investigating matters that were brought to its attention by the bank recently. Westpac commented that the agency has advised that it may amend its statement of claim to include allegations arising from these investigations.

ASX 200 quarterly rebalance

This morning S&P Dow Jones Indices announced the June 2020 quarterly rebalance of the S&P/ASX Indices. The benchmark index will welcome Centuria Industrial REIT (ASX: CIP), Megaport Ltd (ASX: MP1), Mesoblast limited (ASX: MSB), Omni Bridgeway Ltd (ASX: OBL), and Perseus Mining Limited (ASX: PRU) to the illustrious index. Heading to the exits are Estia Health Ltd (ASX: EHE), Hub24 Ltd (ASX: HUB), Jumbo Interactive Ltd (ASX: JIN), Mayne Pharma Group Ltd (ASX: MYX), Pilbara Minerals Ltd (ASX: PLS), and Pinnacle Investment Management Group Ltd (ASX: PNI).

TPG Telecom special dividend.

The TPG Telecom Ltd (ASX: TPM) share price is pushing higher on Friday after providing an update on its special dividend plans. If its merger with Vodafone Australia completes successfully, TPG Telecom plans to pay a fully franked special dividend in the range of 49 cents per share to 52 cents per share.

Best and worst ASX 200 performers.

The best performer on the ASX 200 has been the TPG Telecom share price with a 2% gain. This follows its special dividend update. The worst performer has been the Platinum Asset Management Ltd (ASX: PTM) share price with a massive 12% decline. Investors may be concerned that Platinum’s fund outflows will accelerate again because of the market volatility.

More reading

• Tech shares! Should we even invest in anything else?
• Keep a watch on these 3 ASX trends next week
• Estia Health share price tumbles after being cut from the ASX 200
• Why Jumbo, Santos, Westpac, & Zip Co shares are crashing lower
• Why Mach7, Meridian, Spark, & TPG Telecom are pushing higher

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of MEGAPORT FPO. The Motley Fool Australia has recommended Jumbo Interactive Limited and MEGAPORT FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ASX 200 down 2.2%: Westpac tumbles, TPG reveals special dividend plans appeared first on Motley Fool Australia.

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