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Tech sector valuations may have even further to fall

Even though the valuations of technology stocks have, in general, already fallen sharply in recent weeks, we suspect they may decline further over the next couple of years. This is one reason why we expect the sectors in which they are heavily represented to make limited gains, at best, over that period.
Thomas Mathews Markets Economist
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China’s property sector, monetary policy, and exchange rate

With China’s property sector – and economy more broadly – struggling, we think more PBOC rate cuts are on the way this year, which we expect to result in further falls in the country’s government bond yields and a weakening of its exchange rate.

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While we don’t think the stock market’s falls this week mark the start of a sustained rout, we do expect Fed tightening to curb the upside for mid- and large-cap US equities over the next couple of years. And tighter monetary policy might also weigh a bit more heavily on them than on equities elsewhere.

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