Share Indices for September

Some interesting things are happening on the Stock Markets relating to tech.

In the UK, tech in general this month went nowhere. But that hides a double digit rise in Mobile.

If you look at the YTD figures (ie 9 months to end of Sept 07) you will see that the TechMark100 (and NASDAQ, by the way) are both showing double digit growth. But all the action has been in IT Hardware and Mobile. Now in the UK, most of the IT hardware stocks are consumer related - just like mobile. SCS, which is pretty much all "Enterprise", is up by a modest 2.6% on the year. Indeed, Support Services (which covers the BPO players and IT Staff Agencies and both exclusively supplying "Enterprise") is down 5% on the year.

So my contention is that tech stock market performance this year is 'consumer', not 'enterprise' driven.

If that is the case, what does that portend for the future?

Firstly, there is NO indication that 'enterprise' tech spending is increasing. Indeed both public sector and financial services IT spend (the two real 'enterprise' drivers in the last five years) is likely to have modest growth in the next period. Enterprise will not supply the lift.

So tech will have to rely on 'consumers' continuing with their appetite for 'gadgets' and the knock on effect that has on telco companies and the hardware manufacturers who supply equipment to them and other heavy users of the web.

And that's where I have serious doubts. Given the increase in mortgage payments which many face, will they choose an iphone or HD-DVD player over keeping up the mortgage payments? As house price rises falter will they take on new debt with such abandon as they have shown of late? As unemployment rises and bonuses in the City evaporate, will consumers keep on spending like there was no tomorrow?

Unfortunately, I think not. However, I realise that this is against the view of many who still believe that tech will be a safe haven in the upcoming storm. I hope they are right and my fears are unfounded.