Quick Bites | Visualising the $109 trillion Global Equity Market

Since 2003, global equity markets have tripled in size and reached a market capitalisation of USD 109 trillion in 2023.

Underpinning the rise in asset value growth over the past three decades has been the extraordinary amount of liquidity pumped into the financial system via money supply and an extremely accommodating ultra-low interest rate environment.

Visual Capitalist provides a fantastic visual representation of the global equity market breakdown, clearly showing how the size of the US equity market dwarfs the next closest economy, the European Union. Whilst staggering, the size differential is easily explained given the US is home to 39 of the 100 largest companies in the world.

Source: Visual Capitalist


When considering what this means for the future investment landscape, Goldman Sachs (GS) research estimates that the US equity market cap will fall from 42.5% to 35% of the overall global market by 2030. Meanwhile, emerging markets (EM) including China and India are collectively expected to reach 35% over the same period. By 2050, GS anticipates that EM will overtake the size of the US market, reaching 47% of global stock markets versus ~27%.

The key drivers underscoring this is the significant acceleration in growth of projected gross domestic product (GDP) per capita for emerging economies and rising valuation multiples driven by higher GDP per capita.

What are the implications for investors?

While US equities have previously provided strong outperformance, it does not necessarily mean it will continue. Given the structural shifts underway in the form of growing populations, rise of the middle class and GDP growth, investors should consider the benefits of diversifying their portfolio geographically.



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