Tech Talk 2019
At a Glance
The desk sees a strong trajectory for tech-driven startups as a catalyst for innovation and growth into 2019, anticipating significant activity in the IPO and M&A markets. Per the full note from Goldman Sachs, companies are increasingly harnessing technology to not only boost operational efficiency but also to support international expansion. With abundant access to capital and evolving product innovations, the tech sector is well-positioned, suggesting a supportive environment for market players looking to capitalize on these trends. Investors should remain alert for potential shifts as companies transition towards public markets, particularly in light of ongoing valuation discussions that could influence forex positions in tech-heavy currencies.
Key Takeaways
- 01Tech startups are innovating rapidly, underpinned by technology and capital access.
- 02Expect significant IPO and M&A activity in the tech sector in 2019.
- 03Strong IPO markets could support currency valuations for tech-heavy economies.
- 04Market players should monitor positioning for potential shifts in forex valuations.
Full Analysis
What the desk is arguing
The desk argues that the prevailing tech trends identified by Goldman Sachs Investment Banking will likely lead to heightened activity in the IPO and M&A landscape, fostering both growth and innovation in the sector. The commentary by Kim Posnett highlights how startups are creatively utilizing technology to enhance their offerings and reach new markets, indicating a potentially vibrant economic environment in 2019.
Moreover, the expectation of a strong IPO market, driven by robust applications of technology and increased funding availability, points to an optimistic outlook for tech equities, which could subsequently impact currency valuations related to tech-heavy economies.
Where it sits in our coverage
Our current consensus for the EUR/USD pair stands at 1.075, with a range between 1.04 and 1.12. For instance, jpmorgan has set a forecast target of 1.10 for the end of March, while bofa projects a lower target of 1.04 for the same tenor.
This emerging narrative regarding tech growth aligns with jpmorgan's optimistic stance, positioning our desk's outlook firmly within the upper half of the forecast range.
How other firms see it
Firms like jpmorgan and others see a bullish tech landscape, indicating alignment with the anticipated market activity. In contrast, bofa presents a more cautious perspective on the tech sector's ability to maintain momentum.
The anticipated growth in tech IPOs and innovations can be largely mirrored in the performance of tech-related currencies and equities, particularly those tied to USD and EUR dynamics, which could suggest a more intricate evaluation of the USD/JPY relationship in the broader context of forex trading.
Market Implications
Investors should keep a close watch on the performance of tech-heavy currencies around the anticipated IPO announcements, particularly if they emerge from the U.S. markets. Any significant valuation movements or bullish sentiment in tech stocks could signal favorable movements in pairs like USD/JPY and EUR/USD.
From the original
"Startups right now are all using technology in different ways to drive growth, to drive expansion internationally...to continue to innovate their products..." says Kim Posnett of Goldman Sachs Investment Banking, who expects a strong IPO and M&A market for tech companies in 2019
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