The world’s largest equity markets are not the fastest growing markets
Equity investors looking to rise with the tide take note that the world’s largest equity markets (by market capitalization) are NOT the world’s fastest growing capital markets.
Take the case of the U.S. While it is indeed the world’s largest equity market (SPY) (IWM) (QQQ) with domestic market capitalization equaling $27.35 trillion as of December 2016, it isn’t the world’s fastest growing stock market. Over the last 13 years, total stock market capitalization in the US has grown by just over 115%.
Stock markets in China and India have grown exponentially
Compared to this, Asian emerging stock markets have grown by leaps and bounds.
China’s stock market has grown from a $420 billion back in October 2003, to $7.32 trillion in December 2016; a whopping 1,642.86%. US-exchange traded funds such as the iShares China Large-Cap ETF (FXI), iShares MSCI China ETF (MCHI), the Direxion Daily FTSE China Bull 3x Shares ETF (YINN), and the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (ASHR) are among the most popular funds providing exposure to Chinese equity. These ETFs were up 9.1%, 11.25%, 28.04%, and 6.14% YTD as of March 3, 2017.
India’s stock market has grown by 578.26% over the last 13 years. US-exchange traded funds such as the iShares MSCI India ETF (INDA), the WisdomTree India Earnings Fund (EPI), the PowerShares India Portfolio ETF (PIN), and the iShares India 50 ETF (INDY) are among the most popular funds providing exposure to Indian equity. These ETFs were up 11.38%, 12.87%, 13.07%, and 11.70% YTD as of March 3, 2017.
Much in line with others mentioned above, Brazil’s stock market has grown by 305.26% over the past 13 years; from $190 billion in October 2003 to $770 billion in December 2016. US-exchange traded funds such as the iShares MSCI Brazil Capped ETF (EWZ), the Direxion Daily Brazil Bull 3x Shares ETF (BRZU), the VanEck Vectors Brazil Small-Cap ETF (BRF), and the iShares MSCI Brazil Small-Cap ETF (EWZS) are among the most popular funds providing exposure to Brazilian equity. These ETFs were up 15.72%, 48.37%, 26.18%, and 28.99%, YTD as of March 3, 2017.
Developed markets rank low when it comes to stock market growth
Developed markets (EFA) (VEA) such as the UK, Japan, and Germany have risen by 59.09%, 63.23%, and 84.04%, respectively, during the period, underlining the fact that growth in equity markets isn’t an area where these markets stand as leaders. Emerging markets (EEM) (VWO) such as China and India are set to continue to expand.
We’ve ranked the top 10 stock markets of the world by growth achieved over the past 13 years (last column in the chart above). Accordingly, the U.S., the U.K, Japan, and Germany rank low at 6, 10, 9, and 8, respectively, while emerging markets such as China and India have been the number 1 and number 2 performers, respectively.