1 October we become SureStone CapitalSame team, same ABN. Our website and email addresses move to surestone.com.au.
Preparing video
Key points:
Tech sector volatility underpinned by differences across hyperscale, semiconductor, and software marketsWiseTech (ASX:WTC) identified as an attractive opportunity after recent price declinesRegional rotation favours Korea (SK Hynix, Samsung) and Japan over ChinaCentral bank divergence and persistent inflation support Australian dollar appreciation
David Sokulsky of Carrara Capital highlights the current volatility in global markets, attributing much of the rotation to shifts within the technology sector. Sokulsky identifies significant differences among subsectors, noting that hyperscalers are investing heavily in data centres, raising questions about future returns and cash flow. Conversely, companies in the semiconductor supply chain benefit directly from this spending, resulting in robust performance for the chip sector. Within software, Sokulsky points to wide-ranging impacts from the rise of AI, with some valuations being heavily repriced as growth prospects become less certain. He mentions WiseTech (ASX:WTC) as a strong player whose recent price drop presents an attractive opportunity, while cautioning that other software firms remain overvalued and vulnerable to further disruption.
Turning to regional trends, Sokulsky observes a shift in asset allocation from the US to Asia, with Korea and Japan favoured over China due to factors such as a strong semiconductor sector in Korea (referencing SK Hynix and Samsung), Japanese elections, and corporate reforms. India also features as a site of ongoing reallocation.
On monetary policy, Sokulsky discusses unprecedented central bank divergence, with Australia forced to hike rates amid persistent inflation—leading to a strengthening Australian dollar. Weakness in the US dollar index and rate hikes locally support further upside potential for the Aussie.
