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MARKETS The $109 Trillion Global Stock Market in One Chart
Published 2 days ago on September 27, 2023
By Dorothy Neufeld
Graphics/Design:
Sabrina Lam
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The $109 Trillion Global Stock Market

The $109 Trillion Global Stock Market in One Chart
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Global equity markets have nearly tripled in size since 2003, climbing
to $109 trillion in total market capitalization.

Over the last several decades, the growth in money supply and ultra-low interest rates have underpinned rising asset values across economies.

Given this backdrop, the above graphic shows the size of the global
stock market in 2023, based on data from the World Federation of
Exchanges (WFE) and the Securities Industry and Financial Markets
Association (SIFMA).

The Global Stock Market, by Share
With the world’s deepest capital markets, the U.S. makes up 42.5% of
global equity market capitalization, outpacing the next closest economy,
the European Union by a significant margin.

Here are the world’s major equity markets based on global market cap
share as of Q2 2023:

Country / Region Market Cap Share (%)
🇺🇸 U.S. $46.2T 42.5%
🇪🇺 EU $12.1T 11.1%
🇨🇳 China $11.5T 10.6%
🇯🇵 Japan $5.8T 5.4%
🇭🇰 Hong Kong $4.3T 4.0%
🇬🇧 UK $3.2T 2.9%
🇨🇦 Canada $3.0T 2.7%
🇦🇺 Australia $1.7T 1.5%
🇸🇬 Singapore $0.6T 0.6%
🌏 Rest of Developed Markets $10.2T 9.4%
🌍 Rest of Emerging Markets $10.0T 9.2%
Global Total $108.6T 100.0%
Data as of Q2 2023. Numbers may not total 100 due to rounding.

Today, U.S. equity markets total over $46.2 trillion in market
capitalization.

Compared to other rich nations, U.S. 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, or four-fold
the returns seen in other developed countries.

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 by roughly 12-fold, reaching $19.4 trillion this year. China’s equity markets have also
grown considerably, fueled by the incorporation of Chinese domestic
stocks into the MSCI Emerging Market Index in 2018, and earlier, with
the internationalization of its equity markets in 2002.

Japan’s equity markets account for 5.4% of the global share, followed by
Hong Kong, at 4%.

The Future Investment Landscape
Goldman Sachs projects that U.S. equity market capitalization will fall
to 35% of the overall global market by 2030.

Meanwhile, emerging markets, including China and India, are collectively forecast to reach the 35% mark in the same timeframe. By 2050, the EM
share is anticipated to far surpass the U.S., rising to 47% of global
stock markets.

Country / Region Global Equity Market Share 2030 Global Equity Market Share 2050
🇺🇸 U.S. 34.7% 26.9%
🇪🇺 Euro Area 8.3% 7.9%
🇨🇳 China 14.1% 15.0%
🇮🇳 India 4.1% 8.3%
🌏 Rest of Developed Markets 21.5% 17.8%
🌍 Rest of Emerging Markets 17.4% 24.1%
Numbers may not total 100 due to rounding.

The first factor underscoring this shift is the rapid growth projected
for emerging economies.

Historically, as GDP per capita grows, capital markets in an economy
become more sophisticated. We can see this in richer countries, which
tend to have higher equitization of their markets.

India is projected to rise the fastest globally. By 2030, it is
projected to account for 4.1% of global equity market cap. Furthermore,
by 2050, this share is projected to outrank the euro area due to strong
GDP per capita growth and demographic drivers.

The second factor, although to a lesser extent, is emerging market
rising valuation multiples driven by higher GDP per capita. Richer
countries, as seen in the U.S., often trade at higher earnings multiples because they are viewed to have lower risk.

Implications for Investors
What does this mean from an investment standpoint?

While the U.S. has outperformed in recent decades, it may not mean that
it will continue on this trend, according to Goldman Sachs. Given the structural shifts stemming from growing populations and GDP growth,
investors may consider diversifying their portfolios geographically
looking ahead.

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