How a state-owned company dethroned Apple from the top of the world’s most valuable companies

Apple lost its position as the world’s most valuable company amid a massive sell-off in tech stocks.

In this scenario, Aramco, a state-owned oil and gas producer in Saudi Arabia, moved to the top of the list. It is the first time that Aramco has taken the top spot since 2020.

Investors have been selling shares in tech companies as they move into what they see as less risky assets.

The Brazilian Nubank, for example, the largest digital bank in the world, is one of those that has been suffering from this movement. Since its debut on the New York Stock Exchange in December last year, its shares have already dropped 60% and fintech has lost its position as the most valuable bank in Brazil and Latin America.

Bitcoin, other major cryptocurrencies and digital assets also continued to decline sharply.

Apple shares plunged more than 5% in New York on Wednesday (11) — the company ended trading with a market value of $2.37 trillion.

As a result, the tech giant lost its position as the world’s most valuable company to oil and gas producer Aramco, valued at $2.42 trillion.

Shares of energy producers have soared this year due to the rising cost of crude oil and natural gas.

Meanwhile, Apple shares are down nearly 20% over the same period after a massive sell-off of tech stocks.

The US stock exchange Nasdaq closed down 3.2% in New York on Wednesday after official data showed US inflation hit the highest in nearly 40 years.

Widespread price increases have been the biggest threat to the global economic recovery as the world emerges from the Covid-19 pandemic.

Central banks have responded to the problem by raising interest rates, prompting investors to liquidate riskier assets amid concerns that the higher cost of borrowing is likely to slow economic growth.

In Brazil, it was no different. The Central Bank raised the basic interest rate, the Selic, to 12.75% per year, the tenth consecutive increase.

The move to avoid risky assets has also helped push the price of bitcoin down. The world’s biggest and best-known cryptocurrency has lost around 60% of its value since hitting a record in November last year.

Ether, the digital currency linked to the ethereum blockchain network, has also dropped sharply, losing more than 40% of its value in the last week.

Impact of the pandemic

In January, Apple became the first company in the world to be worth US$ 3 trillion (R$ 15.4 trillion), almost twice the Brazilian GDP in 2020 (Gross Domestic Product, or sum of goods and services of a country) . The tech giant has increased its value during the Covid-19 pandemic as spending on devices has increased during quarantines.

Other tech companies have also seen demand for their products soar as people become more reliant on smartphones, tablets and laptops. In a period of just over 16 months, Apple’s market cap has jumped from $2 trillion to $3 trillion.

Meanwhile, state oil giant Saudi Aramco has benefited from rising energy prices.

Saudi Arabia is the biggest producer in the OPEC (Organization of Petroleum Exporting Countries) oil cartel and Saudi Aramco has more than doubled its net profit to US$110 billion in 2021, above US$ 49 billion (R$ 252.2 billion) in 2020.

The reopening of economies following the Covid-19 restriction measures led to a sharp rise in energy tariffs in 2021, and this year the Ukraine War has pushed prices even higher as countries look to Russia for alternatives for supplies.