NASDAQ's Jump

When experts say the nothing has beaten the ASX over the past few years they're not kidding.
Six years after the NASDAQ index in the US went into a dot-com driven decline, the technology laden market has bounced back, increasing at almost twice the pace of the broader Dow Jones Index.

But the NASDAQ's 23% jump to 2362 points over the last 12 months looks relatively tame beside a powerful 31% surge in the ASX over the same period. As for the broader Dow Jones index, the benchmark US index has improved by just 13%.

It raises the question of how an Australian NASDAQ-style index would have performed. Unfortunately, without a local computer manufacturing industry, the Australian listed tech sector is small, diffuse and of very mixed quality.

The 'IT category' of the S&P/ASX200 is a slight affair with just five stocks, dominated by share registry company Computershare, which is arguably a financial services company rather than a tech listing.

Separately, many of the smaller stocks that represented the hopes of the dot-com boom such as MYOB or Hansen Technologies have been treading water over the past year. But other listings have finally begun to shine, such as LookSmart and Vision Systems '” two companies with troubled histories.

On the NASDAQ '” which is still a long way off its 2000 high of 5048 points '” it is the new wave of technology companies (think Google, Pixar and eBay) and their roles as providers of content and applications that have played a major role in the resurgence of the market rather than older players such as Cisco or Intel, which are now mature stocks.

Viewed together, both the NASDAQ and the S&P/ASX200 indices went from strength to strength in March last year before being stifled by the October slump. They each powered ahead in the month following and have experienced very similar peaks and troughs so far this month.

The NASDAQ and the S&P/ASX200 are both in the midst of separate, yet ultimately related booms: for technology and raw materials. On the surface they appear to have little in common, yet they are both being driven by the new types of consumers emerging in the developed and developing world.