Sunday, November 18, 2007

Change coming in world equity market shares

Looking at the total of all equity market capitalization globally as of 12/31/06, the following is the percentage value by region:
United States---48%
Asia ex Japan---6%
This is from a source called "FactSet" and is included in Janus Capital's Fall 2007 update on its mutual funds.

It is likely that with the decline in the dollar this year and the continued ramp up of China and India that this has changed by a percentage point of two in some regional categories. That aside, this is a startlingly obvious picture of something that will continue to change over time. Asia ex Japan at 6% is hard to believe at first, but it reflects both the opportunity there and the significant amount of business activity that is either in government hands or in private family hands in that region. With more developed capital markets that will change. Japan at 10% doesn't seem out of line, but it is demonstrative of how this division of wealth can change as in 1988 Japan was around 50% of global equity market capitalization. Europe at 31% must represent some meaningful growth in the last decade as capital markets in Germany, France, Italy, and Spain have shaken off the dominance of the debt side of the business.

This is just interesting, and presented for only that reason.


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