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It’s Always Different

Mike Zaccardi, 4:22 am ET

FINANCE NERD THAT I am, I gleefully dug into the 2021 Capital Markets Fact Book that was just published by SIFMA. I was particularly humbled by a chart showing the breakdown of the global stock and bond markets. Why humbled? The data show just how great we U.S. investors have had it in the past decade.

The Fact Book first displays the $58 trillion global stock market’s composition in 2010. The U.S. was 30%, emerging markets 25% and the remainder was a mix of developed foreign markets.

Jump to 2020, and we see significant shifts. The global stock market’s total value has ballooned to $105.8 trillion. Sounds huge, but that’s just a 6.2% annual rate of increase. The U.S. share surged to 38% of the global stock market, while emerging markets shrank to 21%.

It’s a different story for the bond market. In 2010, this $82.3 trillion arena was 37% U.S., 28% European Union countries, 18% Japan and 5% emerging markets. In 2020, the U.S. was pretty much unchanged at 38%, while Europe slumped to 20% and Japan’s share dropped to just 12% of the $123.5 trillion market.

What’s striking is that emerging markets, despite relatively poor stock market returns, increased their bond portion to 17% of the global market. Strong economic growth in emerging markets meant those nations had to take on more debt to finance capital spending.

What about the decade to come? One thing is nearly certain: It’ll look a lot different from the one we just witnessed. It always does.

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