Trade deal or no deal, the tech sector is still in hot water: JP Morgan

While trade deal headlines continue to drive the market, a top global strategist says no matter the outcome, one hot sector still faces big China headwinds: tech.

"China is not likely to abandon its plan about accomplishing its 2025 targets" even if a deal is struck, Anastasia Amoroso, global market strategist at J.P. Morgan, told CNBC's "Futures Now" on Tuesday.

"Even though for the time being we can still supply semiconductor chips and other technology to ZTE, I do worry about China's pivot away from some of the U.S. technology names as it tries to give itself greater assurance about its supply chain," she said.

Beijing's Made in China 2025 program aims for a shift in the Chinese economy toward higher-quality innovation-focused manufacturing in areas such as robotics and biopharmaceuticals. Its goals put the U.S. tech leadership in jeopardy.

U.S. companies in electronic technology derive 18 percent of total revenue from China, according to FactSet data.

That's not the only headwind facing the tech sector, Amoroso said.

"The regulation that may be to come in the technology sector is absolutely something to watch for," she added. "There's many industries that have been regulated quite heavily, but technology has not been one of them."

Facebook, under regulatory scrutiny following its Cambridge Analytica scandal, is seen as the sector's test subject for possible government intervention. Lawmakers in the U.S. and Europe have floated regulation to protect user data on social media platforms.

Uncertainty over trade talks flared back up late Tuesday. The U.S. is reportedly considering a deal to lift sanctions on Chinese telecom ZTE once the company undergoes management changes and pays a hefty fine. President Donald Trump said that penalty could be as large as $1.3 billion.

The U.S. tech sector is up 10 percent year to date, the best among the 11 sectors in the S&P 500.

Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.


Host Bio & Watch Now

Trader Bios