Yet despite these events being a mainstay of life in 2020, reports continue to claim that “tech” is bucking the trend across stock markets.
And to an extent, it is. Record rallies have been recorded in recent weeks and, despite news overnight that US markets had experienced their worst day since June, the overall trajectory remains positive.
However, the US-centricity of these developments – and the dominance of US-based players – is causing a radical shift that not only reflects “fundamental change” in society, but could signal trouble for Europe.
“Technology stocks have been bucking the trend and the shift away from traditional industries is here to stay,” said Anders Borg, senior advisor at IPsoft and Sweden's former minister of finance.
“After the global financial crisis in 2008, we knew that banks and other companies needed support, but we were also sure that the economy would bounce back after the worst had passed. This time, large sectors such as automotive, telecoms, insurance, banking, retail and real estate, are due to come out of this crisis in a radically different shape and the longer the perspective we take – five to 10 years for example – the truer this becomes,” he told Capacity.
In short, “traditional industries” are scaling down – as much as “30 or 40% in the coming years” – as they are transformed by digitalisation, cloud computing and AI technologies.
Although this paves the way for innovation, the US’s track record for building new trillion-dollar companies, coupled with the prevalence of made-in-China tech, signal trouble for Europe in the longer term.
“The stock market is currently reflecting a fundamental change in our society,” said Borg.
“It is a worry for Europe that almost all new innovations in technology are coming from the US, and to some extent, China. Europe was traditionally a leader in the field, and now we are the buyers and users of innovation that originates from the other side of the Atlantic.
“Unless there is some real change in the entrepreneurial climate in Europe, we will continue to see the US building new trillion-dollar companies and attracting the best talent in the global technology race,” he continued.
“To compete, Europe needs to invest a great deal more in education and research to catch up and become leaders of technology transformation.”
