In recent market history, acronym usage began with the TMT (Technology, Media and
Telecommunications) boom in the late 1990s, followed by the BRICS (Brazil,
Russia, India and China and South Africa) in the early-to-mid 2000’s.
Those acronyms defned their investing eras. The TMT bubble saw
the Nasdaq 100 rally over 400 per cent from in the two years to March 2000.
The excitement about BRICS fuelled a 400 per cent rise in the MSCI
Emerging Markets index from Mar 2003 through November 2007. Both
subsequently saw these historic rallies unwind, with the NASDAQ 100 and
MSCI EM declining by 83 per cent and 67 per cent, respectively, over the
ensuing peak to trough drawdowns. Given those ups and downs, the current
serving of alphabet soup is therefore both an opportunity and a threat.
Certainly the current period is shaping up to be defned by
acronym stocks, especially in Asia. In fact, Asian tech leaders like BATs
and HATTS have had a more impressive run than the US FANG stocks.
Combining the unique constituents of the BATs and HATTS, the group
returned an impressive 59 per cent over the last year, over one-quarter
more than the FAANMG stocks. True, the latter have added around $1tn to
market capitalisation, compared with $600bn for the Asian acronyms, but
they started from a bigger base.