The stock exchange and life…
In this pandemic month of August, we learned that the stock market value of a single company exceeded two billion dollars. I speak of Apple, which is the first American company to achieve this value. The only one to achieve this value worldwide, in December, was the oil company Saudi Aramco.
Apple’s achievement was achieved – moreover – in just 24 months. Two years ago it was worth a billion, that is, half the amount now reached.
Covid-19 still led Apple officials to fear the worst, but quickly came to announce that they had managed to regain their growth momentum. The explanation is simple: the pandemic in China was more or less controlled and with that it was possible to resume the production capacity of the most valuable American company.
Stock exchanges and life are things that hardly match expectations. The economy of the overwhelming majority of countries in the world is in decline. In the European Union and the United States, or in Japan, the drop in GDP is around double digits. China alone grows just over 3%.
Nothing seems to disturb the growth of the markets. The world stock exchange index shows a 20% growth in the second quarter of the year, that is, between April and June. Even in Portugal, while the economy fell 16% – in that quarter – the PSI-20 registered gains of 12%.
Nothing seems to link the real economy and the stock markets, but there are admissible explanations. One of them is the value of technology companies like Apple, but also Facebook, Amazon, Netflix, Google, Nvidia, Tesla, Twitter and Chinese companies Alibaba and Baidu. Together, these companies have increased their value by 55% since the beginning of the year.
In addition, there is liquidity that allows for investment and particularly low real interest rates.
The euphoric climate only exists, for now, in the markets and most international organizations assume that the recovery from the crisis caused by the Pandemic will take at least two years.
It remains to be hoped that the Stock Exchanges, as it is often said, look ahead and therefore anticipate the optimism that will mark the future in the medium term. For now they seem to be far from what is felt in the economic life of the various countries.