UK companies succumb to tech bubble fears

On Monday, online retailers and silicon chip designers were among Britain's biggest fallers in trading. ARM Holdings, Imagination Technologies and CSR, three of Britain's biggest microchip designers, all fell, some by as much as 5pc.

Online retailers, which are often valued for their growth potential, also fell. Asos, Ocado and the recently-listed Boohoo.com were among the heavy losers.

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"There’s a slight element of investors looking at the valuations versus the earnings performance and thinking it’s a little bit stretched,” said Ian Williams a technology strategists at Peel Hunt.

“If you look at some of the mid-cap stocks, they have been high growth and I wonder whether part of the problem is that these are now maturing businesses.

“It’s quite surprising that it’s held up as well as it had done given that slightly unhelpful bottom-up background.”

With internet companies' valuations often dependent on growth prospects, any sign of a slowdown can spook traders and infect similar companies. Asos, which is valued at £4bn, has seen shares fall 23pc this year after warning on profits, although its chief executive Nick Robertson last week played down suggestions that a dotcom bubble is emerging .

Weak corporate earnings have also fed worries that a tech bubble may be bursting in the US. Facebook recently paid $19bn for WhatsApp, an instant messaging app that charges its users only $1 a year, while Twitter, whose losses widened last year, attracted a valuation of over $40bn at one point.

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