Tech sector tightens grip on European stock markets – The New York Times

LONDON / MILAN – The surge in technology stocks is increasing their influence on European stock markets, with Prosus poised to take a key place in the continent’s leading index.

Prosus, one of the world’s largest tech investors, will debut on the Euro STOXX 50 on September 21 as part of an index reshuffle, index provider STOXX said on Tuesday. Prosus owns nearly a third of the Chinese company Tencent.

The European tech index has risen by more than 14% so far in 2020, while the larger pan-European STOXX 600 is down more than 10%, hit hard by the economic downturn triggered by lockdowns to fight the coronavirus pandemic across the continent. Tech stocks have led European and US stock exchanges throughout the COVID-19 crisis.

Inclusion in an index can help companies attract additional investors. Equita analyst Gianmarco Bonacina estimates that Prosus could benefit from up to € 2 billion ($ 2.4 billion) in passive fund flows through its promotion to the top 50 stock indexes.

As tech stocks have gained influence, the once dominant banking sector in Europe has gradually shrunk over the past decade. The French Société Générale and the Spanish BBVA are downgraded from the benchmark.

The weight of the banking sector in the benchmark index of the STOXX 600 region is only 6%, according to Refinitiv, against more than a fifth in 2006. The technology sector has meanwhile exceeded 7%, its most up from the dot-com bubble.

One of the main drivers of European equities underperformance over the past decade has been its sector composition, with the region’s stock market shifting away from technology to more ‘legacy’ sectors. where the underlying growth trends are more subdued, ”Morgan Stanley wrote in an action. strategy note.

The telecoms sector, which experienced a golden age at the turn of the millennium, lost two places, the French and Spanish groups Orange and Telefonica to be demoted.

The other stock coming out of the EURO STOXX 50 is German health group Fresenius.

Other companies joining the European elite include Dutch payment processor Adyen, German residential real estate company Vonovia, French wine and spirits group Pernod Ricard and elevator maker Kone.

(1 USD = 0.8434 euros)

(Reporting by Julien Ponthus and Danilo Masoni in Milan; Editing by Elaine Hardcastle)

The post Tech sector tightens grip on European stock markets – The New York Times appeared first on USNewsRank.