Stock, Crypto, Real Estate Bubbles Deflate

  • By Park Soon-chan, Lim Kyeong-eop

    May 20, 2022 11:00

    The prices of stocks, cryptocurrency and real estate, the top three assets that swelled into a huge bubble during the coronavirus pandemic, are deflating amid a global liquidity shortage.

    The stock prices of the five big U.S. tech companies -- Alphabet, Amazon, Apple, Meta and Microsoft -- have declined 33 percent on average compared to their six-month highs. The market cap of the top 100 tech companies on the Nasdaq lost around US$2.8 trillion.

    The top three cryptocurrencies -- Bitcoin, Ethereum and Binance Coin -- fell 57 percent over the same period, while the estimated value of nonfungible tokens (NFTs) at least halved amid some spectacular crashes.

    Salaried workers who parked, or borrowed money to invest, in those assets amid record-low interest rates on savings lost substantial sums and are now saddled with loans while interest is rising.

    Real estate prices here are stagnating or falling by fractions, but experts warn of a bigger crash.

    The New York Stock Exchange on Wednesday suffered the biggest drop in two years. The blue-chip S&P 500 fell 4.04 percent, while the tech-heavy Nasdaq dropped 4.73 percent. Stoking the decline were mounting inflationary concerns among investors after Target, Walmart and other retail giants announced lackluster earnings due to rising raw material and personnel costs plus pessimistic profit outlooks.

    Some analysts say the deflation of the tech bubble reminds them of the collapse of the dot-com bubble in 2001.

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