14 Apr 2014

Tech share tumble sparks NZ sell-off

2:01 pm on 14 April 2014

Technology and biotech shares have tumbled sharply on Wall Street in the last week, prompting a similar sell-off in the New Zealand market too.

The sell-off is due to investors believing companies like Facebook, LinkedIn and Amazon are too expensive.

However, the chief investment officer at BMO Private Bank in Chicago, Jack Ablin, says the stock values of companies are nowhere near as stretched as they were before the last bubble burst at the start of the millenium.

He says it's always a concern when the market moves so dramatically, but the movements of the last week seem, for the most part, to be a correction.

"Valuations are somewhat out of line, we're now entering earning season and this is really where companies tell us what they've done, and in many cases they haven't done enough to justify the prices that they have," he says.

Mr Ablin says investors are now buying for value not faith, with more focus on earnings and dividends, rather than high growth prospects.