Nvidia’s market dominance, US political polarization and Europe’s gas crisis

Nvidia’s market value surpasses entire developed markets in AI boom

What the chart shows

This chart compares Nvidia's market capitalization to the total market cap of eight selected developed markets, tracked monthly from January 2023 to the present. Each cell represents the total market value of a given country or region, as measured by the MSCI All Cap index. A transparent overlay within each cell highlights the proportion of Nvidia's market cap relative to the country's total market size, turning into a solid colour when its market value exceeds the total for that market. This chart highlights the remarkable rise of the US semiconductor company renowned for graphics processing units (GPUs) that power AI technologies.

Behind the data

Nvidia's extraordinary growth amidst the AI-driven boom has turned it into the largest company in the world by market value. Its market cap first surpassed the combined total of Italy, Spain and Portugal in May 2023. By January 2024, the company had overtaken the total market sizes of Australia, Germany and the Nordics. By June 2024, it had surpassed even the United Kingdom for the first time, one of the world’s biggest developed markets. Nvidia's valuation growth underscores the growing dominance of mega-cap technology companies amid speculation and enthusiasm over the transformative potential of emerging technologies like AI.  

Spotting mispriced assets with macro-driven insights

What the chart shows

This table, created using Quant Insight’s (QI) macro fair value model, examines the relationship between asset prices and macroeconomic drivers. It highlights whether the prices of various securities and FX pairs are aligned with their macro-driven fair value, and the extent of any deviation.  

The first two columns show the spot price and the model-derived fair value price. The third column, colour-coded with green for undervalued and red for overvalued assets, quantifies the fair valuation gap (FVG). The fourth column tracks this gap in terms of the degree of overvaluation or undervaluation. The final column shows the R² value, which measures the degree to which macroeconomic factors explain price movements. An R² above 65 indicates strong macroeconomic influence, providing confidence in the model’s validity.

Behind the data

Several insights emerge from this analysis: EUR/USD and aluminium may look like an attractive trade, as they are priced significantly below fair value. But their R² values hover around 50, indicating price movements are likely influenced by factors such as momentum or market sentiment rather than macroeconomic drivers.

On the other hand, GBP/USD and Hang Seng Index both show R² values around 70 and FVG exceeding 1.5 standard deviations, making them attractive candidates for further exploration, particularly after accounting for trading cost. Investors can use this table to identify and prioritize assets for potential trading strategies based on valuation gaps and the influence of macroeconomic conditions.

Are risk-adjusted metrics overstating market performance

What the chart shows

This scatter plot compares the Sharpe ratio and Sortino ratio of major country and region equity indices, with the size of each bubble representing the returns of each index. The Y-axis shows the Sharpe ratio, calculated using the 10-year annualized excess return over 10-year government bonds divided by standard deviation. The X-axis shows the Sortino ratio, which uses the same numerator, but considers only downside risk in its denominator. The green reference line marks where the Sharpe ratio equals the Sortino ratio, providing a benchmark for comparison. This chart provides context for evaluating the relative performance of equity indices and the importance of considering both metrics for a fuller picture of risk-adjusted returns.

Behind the data

Both the Sharpe and Sortino ratios are widely used measures of risk-adjusted returns, with higher values indicating better performance relative to risk. However, the two ratios differ in how they treat volatility:  

• The Sharpe ratio uses total volatility (both upside and downside) in its denominator, treating all fluctuations as negative for returns.
• The Sortino ratio, on the other hand, focuses only on downside risk, recognizing that upside swings are desirable to investors.  

By comparing the two ratios in a scatter plot, we can observe that several developed markets fall above the green line, where the Sharpe ratio exceeds the Sortino ratio. This suggests that the Sharpe ratio may overstate the risk-adjusted performance by penalizing positive volatility alongside negative. The Sortino ratio offers a more nuanced view, particularly for investors more concerned with downside risks.  

Hong Kong office market struggles with record vacancies and falling rents

What the chart shows

This chart tracks trends in vacancy rates and rental prices for commercial office spaces in Hong Kong’s Central business district, broken down into Grade A, B, and C office categories. The data reveals a significant surge in vacancy rates across all office grades since the pandemic, coupled with a pronounced decline in rental prices. Despite some fluctuations, there are no clear signs of recovery in either metric, underscoring the ongoing challenges faced by Hong Kong’s commercial real estate market.

Behind the data

Hong Kong’s economy continues to struggle to regain its pre-pandemic momentum, compounded by several structural and economic challenges:  

• Corporate outflows: Numerous corporations left Hong Kong following the pandemic. Grade A office spaces have reached a record high vacancy rate of 16.4%, with Grade B spaces close behind at 15%.  
• Mainland China’s real estate crisis: This has dampened consumer confidence, further weakening demand and driving down rental prices.  
• Management challenges: Cost-cutting measures by property managers and bankruptcies among landlords have resulted in deteriorating building maintenance and increased dissatisfaction among tenants, further exacerbating vacancies and falling rents.  

These trends reflect not only the broader economic uncertainty but also a structural shift in demand for office spaces, with businesses downsizing or seeking more affordable options.  

Is Europe heading for another gas crisis?

What the chart shows

This chart highlights seasonal trends in European gas inventories, showing historical and forecasted storage levels. The blue line represents 2024 data, including forecasted values derived from seasonal patterns observed over the past five years. The purple line indicates the median storage level, while the green shaded area represents the 25^th to 75^th percentile range of storage levels. Grey shaded areas denote the historical highs and lows since 2016. This visualization shows how current gas storage compares to historical trends and projected levels to provide insight into Europe’s energy supply dynamics.

Behind the data

European gas markets are navigating heightened uncertainty amid ongoing geopolitical and weather-related challenges:  

• Price dynamics: Dutch TTF gas prices surged nearly 20% in November, driven by colder temperatures and reduced wind energy output.
• Storage levels: Europe's gas reserves dipped below 90% for the first time in 2023, raising concerns about winter supply.
• Geopolitics: The Russia-Ukraine conflict continues to strain energy supplies, compounded by Gazprom's recent suspension of gas deliveries to Austria.  

Looking ahead, projections from Goldman Sachs suggest TTF prices could spike to €77/MWh in extreme scenarios, with storage levels potentially dropping to 40% by the end of March 2025 compared to 53% in March 2024. Based on the five-year seasonal pattern, this chart projects storage levels to fall to 44% by the end of March 2025.  

How partisan politics shape US consumer sentiment

What the chart shows

This chart illustrates consumer sentiment trends in the US by political affiliation using data from the University of Michigan. We can see how sentiment shifts dramatically between presidential transitions, reflecting partisan reactions. For example, when Joe Biden took office in 2021, Democratic sentiment surged from 67.5 to 96, while Republican sentiment dropped sharply from 100.7 to 58.5. A similar, opposite trend occurred in 2016 after Donald Trump’s first election.  

Behind the data

This chart highlights the polarization of US politics, where consumer sentiment is strongly influenced by partisan alignment with the presidency, rather than by material changes in the macroeconomic environment. Consumer sentiment increases significantly among those whose political party holds the presidency, while it declines for the opposing party. While sentiment among Independents shows less dramatic swings, their index generally follows the broader economic and political climate. Looking ahead to 2025, a similar flip in sentiment is likely when Trump returns to the presidency. This polarization highlights the challenge of disentangling genuine economic perceptions from partisan biases in consumer data.  

Trump’s Strategic Bitcoin Reserve: What could have been

What the chart shows

This chart simulates the performance of a hypothetical Strategic Bitcoin Reserve (SBR) had it been established on Donald Trump’s first inauguration day in January 2017. The reserve assumes an annual purchase of 200,000 bitcoins, totaling 1 million BTC over five years, with approximately 548 BTC acquired daily. The SBR’s growth is segmented into five annual tranches, each corresponding to the performance of Bitcoin investments made during a specific year. A dotted vertical line marks the proposed starting point of the reserve, and shaded areas represent the performance of different tranches over time. As of September 2024, the simulated reserve has grown to US$86.8 billion.

Behind the data

The concept of a Strategic Bitcoin Reserve, proposed by Trump during his 2024 presidential campaign, has stirred significant debate. Proponents suggest that such a reserve could serve as a hedge against inflation, diversify national reserves and position the US as a leader in the evolving digital economy. Critics, however, point to Bitcoin’s high volatility, the risk of public fund losses and the uncertainty surrounding the long-term viability of cryptocurrencies as reserve assets.

In this simulation:  

• 2017-2020: Had the reserve been established during Trump’s first term, its value would have reached approximately US$38 billion by 2021, despite Bitcoin's significant price volatility.
• 2021-2023: A sharp decline in Bitcoin prices during 2022 led to a temporary dip in the reserve’s value.
• 2024: Renewed investor interest in the crypto market spurred a strong recovery, doubling the reserve’s hypothetical value since its completion in 2021.

This simulation underscores Bitcoin’s potential for significant returns, but highlights the inherent risks and volatility of incorporating cryptocurrencies into strategic reserves. It also reflects broader market trends and the potential implications of large-scale national adoption of digital assets.