March 2012: Composition of World Equity Market Cap 2010 to 2030
Our Chart of the Month in December 2011 was the chart of the racing cars that Goldman Sachs first published 10 years ago, and then updated more recently illustrating the anticipated timeframes over which the various BRIC countries would overtake the GDP of the major developed markets. This month's chart extends that analogy to consider how that relative growth profile and capital market's deepening leads to an astounding change in the relative equity market capitalisation of the Growth Markets (Brazil, Russia, India, China, Mexico, Indonesia, South Korea, and Turkey) compared with the Developed Markets.
The chart shows that in 2010 the Growth Markets comprised 22% of global equity market capitalisation compared with 69% for the combined US and non-US developed markets. Winding the calendar forward a mere two decades and the team anticipates that the Growth Markets and the Developed Markets will each represent 45% of global equity market capitalisation, during a period when total equity market capitalisation has increased in excess of threefold from $43 trillion to $145 trillion. In dollar terms, the Growth Markets will grow in size almost seven times, while the Developed Markets will only double.
While growth in size does not necessarily mean higher performance over that period, it does highlight the significant importance of those economies on the global investment landscape and encourages all of us to consider how to reflect them in our investment portfolios and those of our clients.
1 Source: “Global Economics Paper No: 204”, GS Global ECS Research. 8-Sep-10.
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. Please see additional disclosures.
Indices:
The All Ordinaries Index has moved down over the past week decreasing 29 points (or -0.6%) since closing last Friday to 12:50 pm this Thursday.
The rest of the world as measured by the MSCI index is down 20 points (or -1.5%) from closing last Friday to end of trade Wednesday.
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