- US dominates global equity market scale
- UK’s 2.9% ranks 6th largest
- China’s growth puts it 3rd behind EU
Global equity markets have nearly tripled in size since 2003, climbing to $109 trillion in total market capitalisation. This is based on data from the World Federation of Exchanges (WFE) and the Securities Industry and Financial Markets Association (SIFMA).
Over the last several decades, the growth in money supply and ultra-low interest rates have underpinned rising asset values across regions and nations, yet the US dominates. It remains the deepest market in the world, with a 42.5% share of equity market capitalisation, outpacing the next closest economy, the European Union, by a significant margin.
The UK’s equity market may contain giants like Shell (SHEL), AstraZeneca (AZN) and HSBC (HSBA), yet it is piddling by comparison, making up just 2.9% of the world’s total.
US DOMINATES GLOBAL EQUITY MARKETS
At the end of the second quarter of 2023, the US stock market topped $46.2 trillion in market capitalisation. It would be worth even more today – the S&P 500, for example, has risen more than 7% since the middle of this year.
|
World’s largest equity markets by capitalisation |
| Country/Region | Market capitalisation (trn) | Share |
| US | $46.2 | 42.5% |
| EU | $12.1 | 11.1% |
| China | $11.5 | 10.6% |
| Japan | $5.8 | 5.4% |
| Hong Kong | $4.3 | 4% |
| UK | $3.2 | 2.9% |
| Canada | $3 | 2.7% |
| Australia | $1.7 | 1.5% |
| Singapore | $0.6 | 0.6 |
| Rest of developed markets | $10.2 | 9.4% |
| Rest of emerging markets | $10 | 9.2% |
| Global total | $108.6 | 100% |
| Source: Advisor Channel |
Compared to other rich nations, US stocks have often outperformed over the last several decades. If an investor put $100 in the S&P 500 in 1990 this investment would have grown to about $2,000 in 2023 before dividends, about four-times the returns seen in other developed countries.
By contrast, £100 put into the FTSE 100 would today be worth about £455, although it’s worth noting that dividends play a bigger part of overall returns for the FTSE 100.
CHINA CATCHING UP FAST
The second-largest equity market is the European Union at 11.1% of global share, followed by China, at 10.6%.
In the last 20 years, China’s economy has increased roughly 12-fold, reaching $19.4 trillion this year. China’s equity markets have also grown considerably, fuelled by the incorporation of Chinese domestic stocks into the MSCI Emerging Market Index in 2018, and earlier, with the internationalisation of its equity markets in 2002.
Japan’s equity markets account for 5.4% of the global share, followed by Hong Kong, at 4%.
Tomorrow, we’ll take a brief look at the future of global equity markets, and how they may look if Goldman Sachs’ projections are correct.
