Company Interview / Tech bubble trouble sees miners dig their heels in

Key points:

Tech and semiconductor volatility seen as early stage of a bubble deflation Australian market viewed as rotational, with banks structurally challenged Miners still favoured on long-term commodity and CapEx themes Wesfarmers (ASX:WES), CSL (ASX:CSL) and Cochlear (ASX:COH) highlighted for valuation and earnings risk

Greg Canavan from Fat Tail Investment Research states that the recent sharp moves in US semiconductors suggest the tech bubble is starting to deflate. He points to parabolic gains in names such as SK Hynix and a volatile 10% fall in the semiconductor index, followed by a sharp rebound, as signs of a tug-of-war between bulls and bears. Canavan also notes that upcoming US IPOs, including SpaceX, may be influencing efforts to keep markets orderly.

In Australia, Canavan views the market as choppy and highly rotational. He argues the local bourse avoided the worst excesses of the US tech rally, but now faces short-term swings between banks, commodities, retailers and healthcare. He sees banks as having undergone a genuine negative trend change, while remaining relatively constructive on miners, citing ongoing commodity-intensive data centre and CapEx build-outs.

On sectors, Canavan highlights renewed interest in unloved consumer discretionary and healthcare names, including CSL (ASX:CSL) and Cochlear (ASX:COH). He cites Wesfarmers (ASX:WES) as a quality, consumer-facing business but considers the stock expensive on about 30 times earnings and a sub‑3% yield, with a high payout ratio and limited reinvestment, leaving little margin for error if the economy slows further.