The Impact of Technology on Equity Markets: Empirical Evidence from APEC Markets

This paper investigates the dynamic and state-dependent synchronization between the global ‎technology sector and the equity markets of 19 Asia-Pacific Economic Cooperation (APEC) ‎member economies. Moving beyond traditional linear models that capture only average effects, ‎we employ a Quantile-on-Quantile Regression (QQR) approach to analyze how this ‎relationship varies across the full distributions of both technology and equity market returns. ‎Using daily data from May 1, 2015, to September 12, 2024, our findings reveal a profoundly ‎heterogeneous and asymmetric linkage. The results indicate that developed and tech-centric ‎economies, such as the United States and Taiwan, exhibit strong positive co-movement, which ‎intensifies during bull markets. Conversely, many commodity-driven and emerging economies, ‎including Australia and Peru, display their strongest positive synchronization during market ‎downturns, suggesting the technology index acts as a barometer for global risk sentiment. For ‎instance, the marginal effect of technology on the Peruvian market is highest (0.193) in deep ‎bear markets. Furthermore, we uncover significant asymmetries, as seen in Hong Kong, and ‎clear evidence of decoupling in economies like Thailand. These findings demonstrate that ‎market correlations are highly dynamic, challenging the assumptions of static relationships ‎and providing crucial insights for international portfolio diversification and state-contingent ‎risk management strategies‎.