Apple again missed out on an opportunity to reach a market capitalisation of $3 trillion as its shares dropped on Tuesday, halting a four-day winning streak.
The iPhone maker's stock declined 0.6 per cent to close at $179.29 as investors rotated out of big-tech names. The company remains within striking distance of a $3tn market value, which currently stands at $2.94tn.
Its share price climbed 0.4 per cent to $180.96 before the opening bell in New York on Tuesday, placing its market cap at $2.96tn. Based on outstanding shares, it needed to gain just a little over $1 to reach $182.86, the level that will allow it to become the first company to reach the milestone it has flirted with over the past few weeks.
California-based Apple's stock rose as high as $182.13 this month.
Apple shares gained in the past four trading sessions before the Tuesday drop, up 6.2 per cent during that run and ending Monday at a record.
“It's now one of the more richly valued companies in the market, which shows the dominance of US technology in the world and how confident investors are that it will remain in Apple’s hands. It seems like the stock has priced in every possible good outcome,” Brian Frank, a portfolio manager at Frank Capital, had said.
Apple began seriously aiming to breach the $3tn mark earlier this month when its market value hit $2.94tn on December 11. It dipped to $2.81tn a week later then rose again to $2.89tn at the end of last week.
Microsoft is the only other company in the $2tn club but is still a distant second.
Aside from Apple and Microsoft, the only other trillion-dollar companies in the world as of Tuesday are Google, oil producer Saudi Aramco, Amazon and electric vehicle maker Tesla, CompaniesMarketCap data show. Facebook owner Meta Platforms, the world's biggest social media network, has a market value of $962 billion.
The $3tn achievement would cap a very strong year for Apple – even stretching back to 2020. Year-to-date, its stock has jumped 36 per cent and has surged more than 200 per cent ever since Covid-19 forced the world into lockdowns in March last year.
It's now one of the more richly valued companies in the market, which shows the dominance of US technology in the world and how confident investors are that it will remain in Apple’s hands
Brian Frank,
portfolio manager at Frank Capital
The company was one of the few that did well during the pandemic, which highlighted the need for work, education, entertainment and staying connected remotely.
It reported a 62.2 per cent annual jump in its fiscal fourth-quarter net profit on the back of record revenue, which rose 29 per cent year-on-year to $83.4bn.
Apple strengthened its line-up over the past two years with two new iPhones, this year's iteration of which was well received because of its better cameras. It also released Mac computers and iPads using its new M1 processor, which has more power and is part of a major transition into using chips made in-house.
In October, New York-based management consulting firm Interbrand named Apple the best global brand for the ninth year in a row.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
