Petri Redelinghuys of Herenya Capital Advisors on Nasdaq’s drop and its market implications.
The American market took a downward turn on Friday, with the most significant movement happening in the tech sector. Meanwhile, Mr Price (MRP) saw a 15% growth in the same timeframe. Is that just a coincidence? Is Mr Price on its way to becoming the new market powerhouse? Or is there more to it?
Nasdaq and Mr Price movements in the same time frame.
Nasdaq
Friday’s market drop can be attributed to a few intertwined factors. Chiefly among them are: the narrow concentration of the market rally, the overextension of the semiconductor and A.I. trend, as well as the upcoming SpaceX IPO. The S&P 500’s recent growth has been heavily concentrated in roughly a dozen tech stocks, which makes the market very susceptible to massive drops in value if those tech stocks experience a significant correction.
In this case, a combination of interest hikes, new technology, and the arrival of SpaceX, with the highest recorded IPO, has -at least for the moment- led to a shift away from A.I. and semis, and towards SpaceX and value sectors.
Mr Price
Mr Price’s growth is almost entirely independent of the Nasdaq. It’s largely a result of poor performance in retail and precious metals, which has created an atmosphere where the winners get it all. In this case, it’s apparel retailers. Like Mr Price and Foschini (TFG), which have been performing well, which in turn has led to a significant market rally following their earnings reports on Friday.
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