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Analyst: Sell-off marks tech stock buying opportunity

By Monte Stewart


The Covid South African Variant, which spooked investors on Friday, is a tech buying opportunity, according to an analyst
A leading analyst says the new South African Covid-19 variant is a tech stock buying opportunity. - Photo: Shutterstock

Friday’s market sell-off amid fear of the South African Covid-19 variant spells a clear tech-stock buying opportunity, according to leading analyst.

Daniel Ives of New York-based Wedbush Securities said major divestments like Friday’s support his company’s bullish analysis of tech stocks.

“Over the past 18 months, our bullish tech playbook has been unchanged, and any time we have 10-year (bond) yield spikes (or) variant fears (or) second wave (of Covid-19) worries, we view this as an opportunity to own tech secular winners,” wrote Ives in a research note that he provided to

South African variant roils markets

The new Covid-19 variant in South African and Botswana, known as B.1.1.529, sent US markets roiling as investors unloaded all forms of stocks, including shares in tech companies. The benchmark 10-year US Treasury note, Dow Jones Industrial Average, S&P 500, and Nasdaq all saw significant declines. Meanwhile, the so-called fear index, the CBOE Volatility Index, briefly surged more than 50%.

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Cloud buildout here to stay

But Ives said the sell-off represents “a golden opportunity” to own leading tech stocks into 2022. He said giants like Apple, Microsoft, Facebook’s parent company Meta, Amazon and Netflix Google parent Alphabet are likely to gain – along with cloud-computing, cybersecurity, and 5G-network-related companies.

“Variant fears only reinforce our belief that the cloud buildout among enterprises is here to stay as more companies are prepared for a flexible/semi-remote workforce over the coming years,” Ives wrote.

Read More: Dow drops almost 1,000 points on emerging coronavirus variant

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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