The Australian technology sector has been dubbed the “dunce of the sharemarket,” plummeting 40 per cent over the past 12 months. Aggressive interest rate rises from the Reserve Bank of Australia, combined with the global “SaaSpocalypse” that saw investors dump software stocks, positioned technology as the S&P/ASX 200 Index’s worst-performing industry. However, signs of a potential rebound are emerging, with brokers becoming net buyers of the Betashares S&P/ASX Australian Technology exchange-traded fund (ATec), the only pure-play ETF covering the domestic sector.
Broker activity in June highlights this shift, with Ord Minnett purchasing $3.7 million worth of ATec shares, Morgans Financial $1.8 million, and Bell Potter $1.3 million. Canaccord Genuity and Euroz also made notable acquisitions. Betashares investment strategist Tom Wickenden reported a surge in ETF inflows, attracting nearly $57.6 million this month, significantly more than May’s $11.3 million. Tech companies are highly sensitive to rising interest rates due to their reliance on future earnings; the RBA’s recent decision to hold rates is seen as a factor in the sector’s renewed attraction, easing pressure on growth assets.
“Recent flows suggest many are positioning for a comeback,” Wickenden noted, indicating markets are moving past global software sell-offs and high-rate pressures. ETF Shares investment chief David Tuckwell confirmed shifting sentiment, referencing Evans & Partners’ $10 million purchase of Xero shares. Fund managers are also selectively re-engaging; Solaris portfolio manager Damien Keune is bullish on REA Group, while Ten Cap’s top pick is TechnologyOne. TechnologyOne develops software for universities and councils to run their core systems, providing essential infrastructure to these public and educational bodies. This cautious optimism from market participants signals a potential shift in fortunes for the beleaguered sector.
