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Nvidia Loses Billions of Dollars in Value Due to Investigations

by the Logistics TransportIn the the General Assembly

Nvidia shares seen as a pioneer in the field of artificial intelligence (AI) on Tuesday as investors continue to move away from AI shares lling more than 9 ⁇ , it experienced the largest single-day decline in its history.

Shares of the company, in addition to extended trading hours %It lost 2 more values and lost about $300 billion (€272 billion) of market capitalization in total. This comes after it was announced that the company had received a subpoena from the U.S. Department of Justice (DOJ) as part of an anti-monopoly investigation.

Concerns about monopoly

According to a Bloomberg report released Tuesday after U.S. markets closed, the U.S. Department of Justice has subpoenaed Nvidia and other companies to look for evidence of anti-monopoly violations.

DOJ officials believe that the chip maker's dominance in the global AI chip market leaves customers with limited options, making it difficult for them to switch to other market players only if they don't use Nvidia ⁇ 's products.

The investigation shows that the anti-monopoly investigation has taken a step further as part of the U.S. investigation into Microsoft and Nvidia in June.

These tech giants have been the biggest beneficiaries of the AI boom since 2023, following Microsoft's launch of its AI-powered chatbot ChatGPT ⁇ in February last year. Nvidia is a leader in the supply of Graphics Processing Units (GPU ⁇ s), which are especially required for hyperscalers that support Large Language Models (LLM) training.

Despite recent declines, Nvidia shares this year %It has gained 146 valuations, making the company one of the top performers among global tech stocks.

However, the company announced disappointing quarterly earnings last week, indicating that Nvidia's explosive growth period, which began in the second quarter of fiscal year 2024, could slow. After this announcement, the shares %7 was down.

Tuesday's sales wave shows that investors continue to divest AI stocks in the face of worsening economic signs, reflecting a broader trend in global markets.

Risk avoidance trend prevails in global markets

The market crash led by Nvidia has also been linked to a worsening of concerns about the overall macroeconomic picture.

Risk avoidance dominated global markets on Tuesday; While major European indices closed the day negatively, U.S. indices fell as the month began.

Pan-European Stoxx 600 index %1 down, S&P 500 %2 declined and technology-heavy Nasdaq %It has lost more than 3 cents. There has been a significant decline, especially in semiconductor stocks; Nvidia ⁇ 's collapse spread to global markets and European chip equipment manufacturer ASML %He suffered more than 4 casualties.

U.S. economic data is disappointing.

On Tuesday morning, the U.S. released disappointing economic data revealing its contracting manufacturing activities for the fourth consecutive month in August, rekindling fears of a recession in the world's largest economy.

Amid worldwide turmoil with the Bank of Japan's rate hike and rising economic concerns, Wall Street experienced its worst single-day sale since early August.

Investors are becoming increasingly sensitive to economic indicators after early August sales; The Federal Reserve (Fed) is expected to start lowering interest rates this month.

A possible deeper interest rate cut could signal rapidly deteriorating economic conditions. Historically, there has always been an economic recession during the Fed ⁇ in rate reduction cycle.

Most other major central banks have already begun interest rate cuts in the face of slowing economic growth and falling inflation.

The European Central Bank is also expected to make a decision on interest rates this month, and market participants widely expect the bank to make its second 25 basis points interest rate cut this year.

Poland's central bank becomes biggest buyer of gold

by the Logistics TransportIn the the General Assembly

The National Bank of Poland (NBP) became the largest gold buyer among central banks, along with India, in the second quarter of 2024, according to the World Gold Council. NBP purchased about 19 tons of precious metals during this period.

Adam Glapinski, President of the National Bank of Poland, said earlier this year that the central bank's reserves %He said he planned to make 20 out of gold. Currently, gold is about the size of NBP ⁇ 's reserves. %It makes up 14.7.

At the end of the second quarter of this year, Poland's gold reserves rose to 377.4 tons, and bullion purchases, held predominantly in the Bank of England as of April this year, surpassed even the world's largest economies, ⁇ said Conotoxia market analyst Grzegorv Dróżdż.

In the second quarter of the year, the price of gold also reached a record high, surpassing $2,500 per ounce (€2,249.26).

This has led to speculation as to whether gold is currently a good investment and why central banks have been rapidly increasing their gold reserves in recent times.

Reasons for central banks to buy gold

One of the main reasons central banks have recently accumulated more gold is that they want to diversify their reserves sufficiently to protect against macroeconomic uncertainties and geopolitical shocks.

When it comes to economic and geopolitical fluctuations, currencies and other asset prices can fluctuate, while gold is seen as a safe haven asset and a hedge against inflation.

The relatively stable performance of gold in times of crisis and its inflation protection properties are among the reasons why central banks prefer this metal. In addition, gold, which is considered an effective way to diversify central bank portfolios, has high liquidity and does not pose a default risk.

It is also less affected by policy risks and can be used as a valuable collateral and policy tool. In some cases, gold can also help countries facing international sanctions, such as Russia, avoid those sanctions. This encourages these countries to buy more gold and helps them maintain their liquidity when other means of financing are closed or difficult to access.

Why do central banks buy gold?

Central banks are also buying more gold to reduce their dependence on currencies that dominate their countries globally, especially the U.S. dollar.

According to the World Gold Council, central banks' demand for gold reached 183 tons in the second quarter of the year. This is compared to last year. %An increase of 6 ⁇ , but on a quarterly basis %There was a drop of 39.

Net purchases in the first half of the year reached 483 tons, compared to the same period last year %It was five more.

Dróżdż also added: ⁇ In the second quarter of 2024, global gold demand on an annual basis excluding over-the-counter (OTC) investments %It dropped 6 to 929 tons. The main reason for this decline is the rise in jewelry consumption in response to record high prices. ⁇ reduction. ⁇

⁇ But when OTC investments are included, the total demand for gold is on an annual basis %4 increased to 1,258 tons and reached the highest level since 2000. A large part of this demand is for the purpose of preserving and diversifying their portfolios. %It came from central banks, which increased by 6. ⁇

In addition to the National Bank of Poland and the Central Bank of India, the Central Bank of the Republic of Turkey continued to add another 15 tons of gold to its reserves in the second quarter. Thus, the Central Bank of Turkey has purchased 45 tons of gold so far this year.

Central banks of Jordan, Qatar, Russia, Uzbekistan, Kyrgyzstan, Iraq and Czechia also made significant gold purchases in the second quarter.

On the other hand, the People's Bank of China (PBoC) significantly slowed the gold buying trend in the second quarter of the year.

Demand for gold in Poland increased after the COVID-19 pandemic and the Russia-Ukraine war. Many investors fear that Russia's invasion of Ukraine could spread to Poland and want to invest more gold to protect themselves against such a scenario.

In other parts of the world, stubbornly high inflation is driving people to gold, while other geopolitical shocks such as the Russia-Ukraine and Israel-Hamas wars are further fueling this trend.

In addition to gold, the National Bank of Poland announced that it has also invested in foreign stocks and corporate bonds with the help of exchange-traded funds (ETF ⁇ s) to diversify its reserves.

Factors affecting the gold market

There are many factors that affect the gold market; These include U.S. dollar movements, real and expected inflation rates, and demand for gold jewelry. Central banks' purchases of gold can also have a significant impact on the prices of the metal.

Gold mining production can also have an impact on prices, but this is less obvious. For example, gold mining companies can increase gold prices if production costs increase or when they face problems such as strikes, environmental protests, and weather events.

Currently, a large part of the world's gold mining output comes from China, Australia, Russia, Canada and the United States.

Dróżdż, ⁇ The gold market, like many markets, is driven by supply and demand. In the last few quarters, demand growth has become particularly pronounced, ⁇ said.

Moreover, the constant weakening of the dollar may indicate that gold may outperform other important assets in the short term. Conotoxia ⁇ 's basic scenario predicts that gold prices could slow down with a correction by the end of the year, but remain above the $2,500 per ounce level. ⁇

Weakening Crown Attracts Tourists Norway Revives

by the Logistics TransportIn the the General Assembly

In the last few months, Scandinavian tourism has increased significantly; This is attributed to the fact that the Norwegian krone continues to weaken against most major global currencies.

The Norwegian krone/US dollar pair has been around since the beginning of the year. %It fell 6.50 to trade at $0.091 at the time of writing. Similarly, the Norwegian krone/Euro pair has also been around since early January. %It is currently trading at 0,084 Euro ⁇ , down 5.45.

This has led to an increase in the number of tourists, especially from countries such as China, where Norway is often seen as an expensive country. These visitors are now spending more than ever in luxury clothing and accessories stores like Norway's Moncler and Høyer.

This development has led Norway, as well as other Scandinavian countries such as Finland, Denmark and Sweden, to focus on offering joint tourism initiatives, better flight connections and more payment options to better serve Chinese tourists.

On the other hand, for Norwegians traveling abroad, the weaker crown means prices are going up. The falling exchange rate has also created problems for local Norwegian retailers selling international brands because these brands have become much more expensive to buy.

The reasons for the increase in tourism in Norway

According to Statista ⁇ , in 2024, the travel and tourism market in Norway ⁇ te is expected to generate revenues of $4,682.0 million (€4,291 million), and every year from 2024 ⁇ to 2029 ⁇ %Annual growth is projected at 3.03 percent. In this case, the market value could reach $5,436.0 million by 2029.

In addition to China, Norway is also seeing an increase in the number of visitors from Germany, the USA, Sweden, the Netherlands and Denmark; The summer season, especially between June and August, is very busy. During this period, activities such as canoeing, hiking and camping in the fjords are very popular.

The winter season is the scene of an influx of tourists who want to see the Northern Lights despite much harsher weather conditions. Activities such as skiing are also increasing during this period, and Norway is also attracting attention in terms of unusual experiences such as adventure tourism and glacier exploration.

Currently, package holidays are one of the most popular options, and online sales are also growing rapidly. Norway's investment in sustainable tourism also pays off; Nature lovers and environmentally conscious tourists are increasingly opting for activities such as whale watching, polar bear exploration and bird watching.

With the weakening crown, these often expensive tourism and adventure activities are now accessible even to travelers from lower-income countries.

This is supported by the Norwegian government's focus on environmental and cultural heritage conservation.

Why is the Norwegian krone falling?

The Norwegian krone is sensitive to oil and gas prices because of how dependent the country's economy is on this sector. In this context, the decline of shares in the Norwegian oil industry and the general shrinkage of the oil sector greatly affected the crown.

In addition, Norway has recently begun to impose stricter taxes; Increasing the wealth tax and raising the exit tax if billionaires consider leaving the country are examples. The country may also reimburse the inheritance tax.

This discourages investors from investing in the country; Several wealthy Norwegians have already moved to countries like Switzerland, which has more advantageous tax regulations. This contributed to the fall of the crown.

Kyle Chapman, foreign exchange market analyst at Ballinger Group ⁇ tan, said the recent weakness of the ⁇ Kro is due to two main factors. The first is a rapid decline in investors' risk appetite, while the second is a faster-than-expected decline in Norwegian inflation, ⁇ says.

The Norwegian economy is small and open, and the crown is often the most illiquid and volatile of the G10 currencies. This closely links the krone to risk appetite levels, and global developments have the greatest impact on the exchange rate.

Several factors are influential here, including U.S. electoral uncertainty, China's growth concerns, carry trade ⁇ in resolution, and weak second-quarter earnings reports. All relevant risk indicators for krone are currently in the wrong direction. ⁇

Chapman also noted that investors who think it is a mistake that the US Federal Reserve has not yet lowered interest rates have made large-scale sales in the last few days. This prompted investors to quickly move capital out of Norway and into more stable assets.

Also, unexpected drops in inflation contributed to the sale of the Norwegian krone, although Norges Bank ⁇ still claims that inflation risks are upwards and signals that it will not lower interest rates this year.

Speaking about the future of the crown, Chapman said concerns about a non-linear disruption of the labor market in the U.S. are in place, but the market's response is extreme. In my opinion, the talk about interest rate cuts and Fed ⁇ 's emergency landing based on a single data point is a clear sign that the markets are too scared. When the dust smoke dissipates and the markets stabilize, the crown should return to about 11.80 in August, ⁇ he says.

In a speech at BI Norwegian Business School in November last year, Norges Bank President Ida Wolden Bache said that ⁇ Norges Bank ⁇ does not have a policy goal for the crown. However, we are concerned because the exchange rate is important in terms of inflation and activities in the Norwegian economy. A tighter monetary policy stance would normally lead to a stronger krona, ⁇ he said.

Speaking about how the Norwegian krone will look in the coming months, Bache said, ⁇ Looking ahead, climate change and the energy transition are important trends. Activities in the oil sector will be reduced sooner or later, which can be accelerated by a more stringent climate policy. On its own, the downsizing of the oil sector and the possible loss of oil and gas revenues may indicate a weakening of the real krone exchange rate.

However, much of our oil wealth has already been converted into financial reserves. The dependence of the external balance on oil revenues is less than it would otherwise be. This causes the effect on the real exchange rate to be smaller, ⁇ he said.