Biotech stocks are in bloom
THE Nasdaq stock exchange has long been associated with technology companies, attracting high-profile listings such as Apple and Microsoft at the start of their journeys to global domination.
Accordingly, the stocks on the exchange are considered to be more volatile and growth-oriented.
While technology stocks continue to dominate the top of the Nasdaq 100 index table of the biggest companies by market capitalisation, there are lots of interesting opportunities to invest in other sectors through Nasdaq today.
Since the dot-com bubble burst in 2000 – after which the value of the Nasdaq plummeted by 78 per cent within two years – the exchange has managed to attract lots of biotech and pharmaceutical companies, as well as financial and telecoms firms.
The global biotechnology sector as tracked by the Nasdaq Biotech Index (NBI) has surged in the last couple of months, outperforming the S&P 500 by 10 per cent, as small biotech companies announce positive clinical data and approval for new drugs.
And the longer-term biotech investment case remains firmly intact as heavily indebted developed economies face the challenge of providing ever more healthcare to ageing populations.
Stocks to keep an eye on in the biotech sector, according to recent analyst notes, include BioSante Pharmaceuticals, an Illinois-based pharmaceutical company, Canada’s YM BioSciences and Aeterna Zentaris, and Trinity Biotech, which is headquartered in Ireland.
Or you can simply use an exchange-traded fund (ETF) to track the NBI instead.
If technology is more your bag, however, the good news is that there are reasons why fears of a dot-com boom and bust scenario may well be unfounded – despite the excitement surrounding the Nasdaq listings of Moscow-based Yandex, dubbed the Russian Google, and professional social-networking site LinkedIn.
After all, the Nasdaq today stands at only around a half of the level it reached at its dot-com peak more than 11 years ago, when it crossed the 5,000 mark.
And, in most cases, today’s new listings are already turning a profit – although some analysts fear that the tech bubble building in the private markets due to the success of websites such as Facebook could be pretty big when it hits the public markets.
Next week: our series concludes with a look at some of the opportunities presented by the Asian exchanges.