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The US-China technology war will destabilize the tech world

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The US-China technology war will destabilize the tech world

The American tech war with China is heating up, and the tech world isn’t looking good. The technological war would suppress demand for the near future and raise the expense of all players to market. The tech world also goes high, with the rise of tech stocks as central banks raise liquidity in response to the pandemic.

But as the effects of the digital battle becomes more evident over the coming quarters and earnings reporting seasons, financial markets will be plunged into a freeze. There might not be enough uncertainty to neutralize concerns about structural degradation. The cracking sound may be louder than in 2000 as this tech world explodes, and drives more shivering into financial markets than the 2008 crisis.

The tech world is on edge

The planet is seeing the largest tech world in history. Go no further than Apple, which has achieved a market valuation of US$ 2 trillion. Even though Apple is a strong company with a viable business model, its main cell phone sector is a sunset industry. Since it’s already a technology giant, how much space is there for growth? But its price-to – earnings ratio – nearly 40 times – is its highest in a decade and makes no sense at all.

There is also less interest in valuing other tech firms. Tesla may be the biggest automotive maker in the world by market size, but it is in reality a small business by sales in an industry – and a portion of the sector – with huge overcapacities. Uber is a ride-hailing company and can only expand quickly by cutting rates. Companies such as Facebook and Google are profiting from data collection and are steadily under government oversight. Their business model is susceptible to being sustainable.

The new world is even bigger; as opposed to the Y2 K trap, Covid-19 is a true crisis; because after the Great Depression the world economy is in the worst trouble. However, central banks have followed their normal strategy. Slashing interest rates to zero and pumping into the global financial system trillions.

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