Irish high-tech firms have clawed back some of their losses as technology shares around the globe bounced back from the battering they took earlier in the week.
Despite strong US jobs data and a surprise earnings warning from telecoms giant Lucent Technologies, the tech-heavy Nasdaq closed yesterday at 3,882.5, up 155.38 points - or 4.17 per cent - partially reversing the 10 per cent loss suffered since Monday.
Irish high-tech firms have not escaped the drubbing suffered by other technology shares listed on the Nasdaq index in recent days.
Most leading Irish technology firms have fallen sharply since trading resumed after the New Year holidays as global investors, spurred by fears of higher interest rates, sold highly valued technology shares and moved into cheaper economic growth-driven areas such as consumer goods and manufacturing.
Iona Technologies was one of the hardest hit of the Irish firms listed on the electronic exchange, closing more than 20 per cent below its end-1999 levels by Thursday although it had recouped the bulk of these losses by the close of business in the US yesterday, ending around $50, compared to $53.75 at the end of last year.
Baltimore also suffered during the week, shedding 16.5 per cent in the first four days before clawing back some 4 per cent of its value yesterday to end at $76.
Meanwhile, SmartForce shares have fared better, ending the week little changed at $30.87 while Trintech stock closed at $47, compared to $49.38 at the end of last week.
Even Esat, whose share price has been shored up by the hostile bid for the company from Norwegian telecoms group Telenor, could not escape the battering and lost 3 per cent over the first four days of the week, before recovering yesterday.
Analysts say the outlook for Irish technology stocks is closely bound up with what happens their counterparts elsewhere.
But although cyclical stocks are likely to remain in favour over the coming weeks, they believe technology stocks may be able to win back their leadership position down the line.
"I would not be convinced that this is the year of the food and beverage sector. We'll have a three-month sector rotation and people will be back buying tech stocks sometime in the next six months," said Mr Gary Dugan, global strategist at J.P. Morgan Investment Management in Lon don.
Fund managers said the switch to a value focus was more about rebalancing portfolios to ensure an even mix of cyclical and growth stocks, rather than a major tactical move into economy-sensitive shares.
Mr Gerald Holtham, global strategist at Norwich Union Investment Management in London, said cyclical shares tended to make all their gains over a short-term horizon and the recent gains by such shares reflected a short-term tactical move by big funds.
"There is a lot of shifting in an attempt to catch that short-term performance rather than a decision to fill up portfolios with cyclically sensitive stocks," he said.
"Last year people thought cyclicals had had their run and shifted back into growth stocks. Meanwhile, all the recent economic news has been strong and there is another tactical shift into cyclicals to take advantage of this," he said.
