Markets
The $109 Trillion Global Stock Market in One Chart
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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.
Markets
Visualizing the Rise of the U.S. Dollar Since the 19th Century
This animated graphic shows the U.S. dollar, the world’s primary reserve currency, as a share of foreign reserves since 1900.
Creator Program
Visualizing the Rise of the U.S. Dollar Since the 19th Century
As the world’s reserve currency, the U.S. dollar made up 58.4% of foreign reserves held by central banks in 2022, falling near 25-year lows.
Today, emerging countries are slowly decoupling from the greenback, with foreign reserves shifting to currencies like the Chinese yuan.
At the same time, the steep appreciation of the U.S. dollar is leading countries to sell their U.S. foreign reserves to help prop up their currencies, in turn buying currencies such as the Australian and Canadian dollars to help generate higher yields.
The above animated graphic from James Eagle shows the rapid ascent of the U.S. dollar over the last century, and its gradual decline in recent years.
Dollar Dominance: A Brief History
In 1944, the U.S. dollar became the world’s reserve currency under the Bretton Woods Agreement. Over the first half of the century, the U.S. ran budget surpluses while increasing trade and economic ties with war-torn countries, expanding its influence as the world’s store of value.
Later through the 1960s, the U.S. dollar share of global foreign reserves rapidly increased as political allies stockpiled the dollar.
By 2000, dollar dominance hit a peak of 71% of global reserves. With the creation of the European Union a year earlier, countries such as China began increasing the share of euros in reserves. Between 2000 and 2005, the share of the dollar in China’s foreign exchange reserves fell by an estimated 15 percentage points.
The dollar began a long rally after the global financial crisis, which drove central banks to cut their dollar reserves to help bolster their currencies.
Fast-forward to today, and dollar reserves have fallen roughly 13 percentage points from their historical peak.
The State of the World’s Reserve Currency
In 2022, 16% of Russia’s export transactions were in yuan, up from almost nothing before the war. Brazil and Argentina have also begun adopting the Chinese currency for trade or reserve purposes. Still, the U.S. dollar makes up 80% of Brazil’s reserves.
Yet while the U.S. dollar has decreased in share of foreign reserves, it still has an immense influence in the world economy.
The majority of trade is invoiced in the U.S. dollar globally, a trend that has stayed fairly consistent over many decades. Between 1999-2019, 74% of trade in Asia was invoiced in dollars and in the Americas, it made up 96% of all invoicing.
Furthermore, almost 90% of foreign exchange transactions involve the U.S. dollar thanks to its liquidity.
However, countries are increasingly finding alternative options than the dollar. Today, Western businesses have begun settling trade with China in renminbi. Looking further ahead, digital currencies could provide options that don’t include the U.S. dollar.
Even more so, if the U.S. share of global GDP continues to shrink, the shift to a multipolar system could progress over this century.
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