Investors Rotate Away From Tech As Sector Volatility Inflates Borrow Costs

Recent volatility in software and technology stocks has continued to reshape equity market behavior, disrupting sectors such as deal-making and IPO pipelines as dealmakers cite uncertainty and rapid valuation swings. These moves reflect broader nervousness among investors and a rotation into cheaper and smaller companies as risk aversion rises.

For stock loan desks, this has concrete implications. Technology names have historically been a cornerstone of borrow demand, often driven by short selling and hedge positioning. When volatility spikes and investor sentiment shifts, borrow costs in tech equities can widen sharply, tend availability can tighten, and lenders reassess liquidity assumptions.

Borrowers with concentrated positions in tech names may feel this shift in increased cost of borrowing or in more stringent collateral requirements. At the same time, lenders may adjust underwriting to reflect the changing risk landscape in sectors with heightened price swings.

You can also read our article The Real Economics Of Non Recourse Stock Loans.