HQ TrustFebruary 9 2021

HQ Trust: NASDAQ 100 vs. Global GDP

2 mins read

Written by Sven Lehmann, Partner and Fund Manager at HQ Trust

To view this article in German please click here.

It is no secret which shares have been the most popular among investors in recent years: Tech companies. In 2020, the stock market value of the NASDAQ 100 rose by more than 50 percent. By comparison, global GDP slumped by around 4 percent in the same period. When will the NASDAQ overtake GDP?

Admittedly, it is a theoretical calculation that Sven Lehmann has carried out. For his analysis, the fund manager of the HQT Global Quality Dividend extrapolated the long-term growth of the global economy (plus 4.3 percent since 2004) and the growth of the stock market value of the NASDAQ 100 in various scenarios and compared them with each other. 

  • “Currently, the market capitalisation of the NASDAQ 100 and global GDP still seem very far apart. But the technology exchange is catching up rapidly.”
  • “When we started looking at it in June 2004, the stock market value of the NASDAQ 100 was still just over 5 per cent of GDP.”
  • “By the end of 2019, this figure was already 11 per cent – by the end of 2020, it should have been close to 17 per cent.” 

Sven Lehmann’s calculations show how rapidly things could continue:

  • “If the NASDAQ 100 continues to grow at the same pace as it has since 2004 (up 11.9 per cent p.a.), the market capitalisation of the 100 largest tech companies would exceed global GDP in March 2045.”
  • “If the NASDAQ 100 continues to grow at the same pace as in the past 10 years (up 14.3 per cent p.a.), its stock market value would exceed global GDP in March 2040.”
  • “If the NASDAQ 100 continues to grow at the same pace as in the past 5 years (up 22.7 per cent p.a.), its stock market value would exceed global GDP in October 2031.”
  • “If the NASDAQ 100 continues to grow at the same pace as last year (up 50.2 per cent p.a.), its stock market value would exceed global GDP as early as October 2025.”