Finance & Insurance

Brazilian and Indian share prices became the highest performing of the major developed and emerging economies as of June 2023, with index values of 235.25 and 230.91 respectively in that month. Conversely, the lowest-performing were China and the Germany, both with index values of 86.98 and 113.04 respectively at this time. The index value is calculated with 2015 values as the baseline (i.e. 2015 = 100).

In 2022, life insurance premiums written in the United States were valued at 672 billion U.S. dollars. Non-life insurance premiums written in the U.S. amounted to 2.28 trillion U.S. dollars in that year, however unlike most countries this amount includes basic health cover, meaning the U.S. is over 1.95 trillion U.S. dollars higher than second-placed China, who recorded non-life insurance premiums of 333.45 billion U.S. dollars.

Berkshire Hathaway is the largest global insurer Berkshire Hathaway, which is owned by Warren Buffett and headquartered in the US state of Nebraska, was the largest insurer worldwide in terms of revenue in 2022. However, the next largest insurer was Ping An Insurance, which is based in the rapidly growing Chinese city of Shenzhen.

Berkshire Hathaway vs Ping An Insurance The revenues of both insurers have been steadily growing over the past decade. However, the growth of Ping An Insurance has been more rapid for Ping An than for Berkshire Hathaway, which may indicate that the former will some day catch up with the latter.

The global banking sector has seen significant growth in recent years, with the market capitalization of the 100 largest banks reaching 6.7 trillion euros in the third quarter of 2024. This marks the highest value observed since 2016, reflecting a strong recovery and expansion in the banking industry. The upward trend is particularly noteworthy given the fluctuations experienced in previous years, including the sharp decline during the early stages of the COVID-19 pandemic in 2020.

While market capitalization provides one measure of bank size, total assets offer another perspective. In 2023, Chinese banks occupied the top four positions globally based on total assets, with the Industrial and Commercial Bank of China (ICBC) leading at approximately 6.3 trillion U.S. dollars. However, when ranked by market capitalization, JPMorgan Chase took the top spot, with ICBC falling to third place. This highlights the different metrics used to assess bank size and influence in the global financial landscape.

The growth in market capitalization of the world's largest banks is mirrored by the expansion of China's banking sector. By 2023, the number of banking institutions in China had reached 4,561, showing relative stability in recent years after a period of increase. Additionally, the value of bank assets in China amounted to 47 trillion U.S. dollars in 2022, nearly tripling over the past decade. This rapid growth underscores China's increasing importance in the global banking industry and its potential influence on overall market capitalization trends. 

As of September 2024, JPMorgan was the world's leading bank in terms of investment banking revenue, generating around 5.1 billion U.S. dollars from the start of the year until that date. In 2023, JPMorgan was also the largest bank in the United States by total assets, followed by Bank of America and Wells Fargo.

The top five investment banks globally were all American multinational firms. As of September 2024, the two leading investment banks by revenue were JPMorgan and Goldman Sachs. While JPMorgan outpaced Goldman Sachs, both banks reported revenues exceeding four billion U.S. dollars. Bank of America and Morgan Stanley ranked third and fourth, with revenues of approximately 3.4 billion and 3.3 billion U.S. dollars, respectively. Together, these four banks held nearly a third of the global investment banking market share in terms of revenue during the first half of 2024.

Unsurprisingly, JPMorgan was also the leading bank in terms of investment banking fees. These fees represent the returns banks earn for offering investment services, such as facilitating mergers and acquisitions. In 2024, the largest value of investment banking fees came from services provided to the financial sector.

The outstanding value of the credit by all commercial banks in the United States has increased for several months in a row between December 2023 and August 2024. In 2024, the value of bank securities, loans, and leases is much higher than several years ago. The last time in which the value of credit went through periods of decline was between 2008 and 2010, as well as a brief period between March to November 2023.

The New York Stock Exchange (NYSE) is the largest stock exchange in the world, with an equity market capitalization of over 30 trillion U.S. dollars as of September 2024. The following three exchanges were the NASDAQ, Shanghai Stock Exchange, and the Japan Exchange Group. 

What is a stock exchange?

A stock exchange is a marketplace where stockbrokers, traders, buyers, and sellers can trade in equities products. The largest exchanges have thousands of listed companies. These companies sell shares of their business, giving the general public the opportunity to invest in them. The oldest stock exchange worldwide is the Frankfurt Stock Exchange, founded in the late sixteenth century. 

Other functions of a stock exchange

Since these are publicly traded companies, every firm listed on a stock exchange has had an initial public offering (IPO). The largest IPOs can raise billions of dollars in equity for the firm involved. Related to stock exchanges are derivatives exchanges, where stock options, futures contracts, and other derivatives can be traded.

The euro-to-dollar exchange rate fluctuated significantly in 2022, reaching its lowest recorded value since 2008 during that time. Figures were different later in the year, however, with a rate of 1.06 USD recorded at the end of November 20, 2024. The average (standardized) measure is based on the calculation of many observations throughout the period in question. It is therefore different than an annual measure at point in time, which reflects concrete values as of end of the year.

EstablishmentThe euro, which was established in 1992, introduced in non-physical form in 1999 and finally rolled out in 2002, is used by 19 of the 27 member states of the European Union. This group of 19 countries is otherwise known as the eurozone or euro area. By 2018, the total value of euro currency in circulation was almost 1.2 trillion euros, or over 3.4 thousand euros per capita.

Euro to USDBetween 2001 and 2008, the average annual exchange rate of the euro to the U.S. dollar noted a steep increase. In 2008, the euro to U.S. dollar annual average exchange rate was equal to 1.47, which meant that one euro could buy 1.47 U.S. dollars. By 2019, this value had decreased overall, to a value of 1.12 which meant that one euro could buy 1.12 U.S. dollars. Similar dynamics in the euro to U.S. dollar exchange rate were also reflected in the monthly exchange rate in recent years.

As of October 16, 2024, the yield for a ten-year U.S. government bond was 4.04 percent, while the yield for a two-year bond was 3.96 percent. This represents an inverted yield curve, whereby bonds of longer maturities provide a lower yield, reflecting investors' expectations for a decline in long-term interest rates. Hence, making long-term debt holders open to more risk under the uncertainty around the condition of financial markets in the future. That markets are uncertain can be seen by considering both the short-term fluctuations, and the long-term downward trend, of the yields of U.S. government bonds from 2006 to 2021, before the treasury yield curve increased again significantly in 2022 and 2023.

Government bonds, otherwise called ‘sovereign’ or ‘treasury’ bonds, are financial instruments used by governments to raise money for government spending. Investors give the government a certain amount of money (the ‘face value’), to be repaid at a specified time in the future (the ‘maturity date’). In addition, the government makes regular periodic interest payments (called ‘coupon payments’). Once initially issued, government bonds are tradable on financial markets, meaning their value can fluctuate over time (even though the underlying face value and coupon payments remain the same). Investors are attracted to government bonds as, provided the country in question has a stable economy and political system, they are a very safe investment. Accordingly, in periods of economic turmoil, investors may be willing to accept a negative overall return in order to have a safe haven for their money. For example, once the market value is compared to the total received from remaining interest payments and the face value, investors have been willing to accept a negative return on two-year German government bonds between 2014 and 2021. Conversely, if the underlying economy and political structures are weak, investors demand a higher return to compensate for the higher risk they take on. Consequently, the return on bonds in emerging markets like Brazil are consistently higher than that of the United States (and other developed economies).

When investors are worried about the financial future, it can lead to what is called an ‘inverted yield curve’. An inverted yield curve is where investors pay more for short term bonds than long term, indicating they do not have confidence in long-term financial conditions. Historically, the yield curve has historically inverted before each of the last five U.S. recessions. The last U.S. yield curve inversion occurred at several brief points in 2019 – a trend which continued until the Federal Reserve cut interest rates several times over that year. However, the ultimate trigger for the next recession was the unpredicted, exogenous shock of the global coronavirus (COVID-19) pandemic, showing how such informal indicators may be grounded just as much in coincidence as causation.

In July 2024, the personal saving rate in the United States amounted to 2.9 percent, which is 1.5 percent lower figure than a year earlier. The personal saving rate is calculated as the ratio of personal savings to disposable personal income. Within the topic of personal savings in the U.S., there are different goals and reasons for saving. 

Saving refers to strategies of accumulating capital for future use by either not spending a part of one’s income or cutting down on certain costs. Saved money may be preserved as cash, put on a deposit account, or invested in various financial instruments. Investing usually incorporates some level of risk which means that part of the invested money can be gone. An example of a relatively safe investment would be saving bonds, such as the debt securities issued by the U.S. Department of the Treasury.

Looking at the personal saving rate in the United States throughout the past decades, it can be observed that savings had been decreasing until the mid-2000s, and they increased after the 2008 financial crisis. Still, the largest savings rates were reached in 2020 and 2021. The reason for that increase in the savings rate that year might be related to the measures to contain the COVID-19 pandemic. The value of personal savings in the United Kingdom has also followed a similar trend. Although events like the COVID-19 pandemic may have affect many countries in a similar way, the ability to save, as well as the average savings as a share of personal income across countries can vary significantly depending on multiple factors affecting each territory.

As of 2024, Chinese-based investment assets comprised the smallest portion of many  Sovereign Wealth Funds (SWFs) portfolios. Temasek was an outlier, however, allocating over 20 percent of its portfolio to Chinese assets. Abu Dhabi based ADIA held that largest portion of U.S. based assets, with over half of its portfolio being managed in U.S. securities.