Another tough week for risk assets saw equities end lower (more below), whilst recent developments in China cut stock market returns in an unexpected way. Shares of tech giant Apple, sunk last week on news of an iPhone ban for Chinese government officials. Over the course of two days almost $200bn dollars was wiped off Apple’s market cap as investors fretted over a potential crack-down in the company’s biggest foreign market and production base.
Indexes such as the tech-heavy Nasdaq composite were down last week with Apple being partially responsible. Apple is the largest weighting in both the S&P 500 and the Nasdaq. On Thursday the Nasdaq fell 0.89% whilst Apple shares were down 2.90%.
In the last number of weeks Indexes such as the Nasdaq have engaged in manoeuvres to combat overconcentration. In the Nasdaq-100, 55% of weighting was carried by the Magnificent Seven (Apple, Microsoft, Nvidia, Amazon, Tesla, Meta & Google). Nasdaq officially rebalanced the weighting of the index in July on guidance from the US Securities and Exchange Commission. The combined weight of the five companies with the largest market caps have been set to 38.5%.
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