Few sectors were spared the heavy selling in equities last week, as the markets react to the prospect of tighter Covid-19 restrictions and a ‘blue wave’. The losses in IT were concentrated in fintech stocks, as investors fret over the prospect of tighter financial regulation. Notable cases in point include Fidelity National Information Services (-13.7% last week), Fleetcor Technologies (-14.8%), Global Payments (-10.9%), Mastercard (-12.4%) and Western Union (-11.5%).
The focus on how Joe Biden would impact ‘big tech’ has not unnaturally been on the potential for anti-trust legislation. The trick of any left leaning administration will be how to craft legislation that fosters competition, while retaining the incentives crucial for R&D. Investment in R&D had risen sharply prior to the pandemic, climbing to new highs as a share of real GDP. Record investment across the economy had gone hand in hand with a big jump in the real median income.
Big tech has been good for R&D. The trick of any left leaning administration will be how to craft legislation that fosters competition, while retaining the incentives crucial for R&D. If the Democrats fail, equities will suffer.
Summary
• Biden and the risks for Fintech
• Trump has presided over record R&D and rising incomes
• Democrats
