Global internet stocks rallied strongly last week after U.S. inflation figures for October came in slightly lower than expected, signaling a potentially less hawkish Federal Reserve next year.
Following a massive tech sell-off only a few weeks ago on weaker mega-tech earnings, global internet stocks rebounded last week. The ALPS O’Shares Global Internet Giants ETF (OGIG) rallied 13.28% last week as growth stocks bounced back with the U.S. 10-year yield falling roughly 40 basis points, ALPS wrote in a November 14 insight.
The rally has continued into this week. OGIG was up nearly 5% in the first hour of trading on Tuesday. Over the past five days, the fund has increased over 17%, bringing its trailing one-month returns to over 5% as of November 15.
Although many sell-side strategists remain skeptical of the tech rally, U.S. Treasury yields recorded the largest one-day drop since 2008 after the inflation print, while the dollar also weakened the most since 2015 — both factors that act as tailwinds to growth assets, ALPS wrote.
Gains in OGIG last week were broad-based across its internet segments.
In the cloud software segment, internet software developer Cloudfare Inc. (NET US, 1.23% weight as of November 11) was OGIG’s best performer last week, jumping nearly 38% as the high-multiple, high-growth stock got a valuation boost from its longer-duration cash flow profile benefitting from falling interest rates, ALPS wrote.
Five9 Inc. (FIVN US, 0.73% weight as of November 11), a cloud contact center software provider, returned 35.19% last week on falling interest rates and after analysts defended its reset fourth quarter guidance expectations subsequent to the stock selling off the week prior, according to ALPS.
In the fund’s online media segment, video game software company, Unity Software Inc. (U US, 1.00% weight as of November 11), rallied over 31% last week as its acquisition of IronSource (IS, not in OGIG) was applauded by investors as it drove a large third quarter revenue increase and beat, ALPS wrote.
OGIG’s online service segment saw food delivery firm Delivery Hero SE (DHER GR, 1.35% weight as of November 11) increase 33.53% last week on better-than-expected third quarter results.
Almost every country exposure within OGIG saw large gains last week as global markets moved higher on the back of disinflationary trends in the U.S. OGIG’s largest weightings by country are to the U.S. and China, which returned 13.99% and 7.54% last week, respectively.
The top performers among OGIG’s Chinese exposure last week include online recruitment servicer Kanzhun LTD (BZ US, 0.98% weight as of November 11) and e-commerce company JD.COM Inc. (9618 HK, 0.81% weight as of November 11), which returned 13.38% and 8.94%, respectively, according to ALPS. Major Chinese internet stocks rallied last Friday on the potential easing of China’s zero-COVID policies sometime next year.
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