The Australian stock market is set to fall as technology sector falls, according to a report from digital equity strategist Digital Alliance.
In a note to clients, Digital Alliance said a number of emerging digital companies, including Uber, are also expected to fall, and it expects that will make for a “big decline in the Australian dollar”.
“This means that Australian shares will become less attractive to the Chinese,” the analyst said.
“The biggest risk is that the Australian economy and the global financial system will start to look less and less like one that can handle this type of volatility.”
We think that a major event like a China devaluation could have a big impact on the Australian stockmarket.
“In a market dominated by the likes of Amazon, Google and Facebook, Digital Ally said it expects shares of technology companies to drop from $3.30 a share today to $1.25, while those of telecommunications companies will slide from $1 a share to $0.90.”
Digital Alliance said the key factors in the digital sector’s fall include the slowing pace of Chinese economic growth, lower demand for Australian services, and concerns about the financial stability of the country. “
This could also lead to some changes in the value of the stockmarket, which could have negative implications for the overall Australian economy.”
Digital Alliance said the key factors in the digital sector’s fall include the slowing pace of Chinese economic growth, lower demand for Australian services, and concerns about the financial stability of the country.
Digital Ally also warned of the impact on investors who are currently trading in Australian shares, particularly those who are holding shares in Chinese companies.
“While these are generally good investors, many of them are holding large amounts of cash and are more dependent on future interest rate growth for funding their long-term financial plans,” the report said.
Digital Alliance also said investors could also suffer as the financial system struggles.
“If a major financial crisis or recession were to occur, this could have significant impacts on the financial markets as they will have to provide support for the financial sector,” the agency said.