Analytics

 Investment Office

Selecting relevant market observations

Investment Thoughts
Macro Observations
Capital Markets
Markets in History
Beyond Finance
Quotes on the Fly
Chart Gallery
Academia
Coffee Chronicles
Archives
Asset Management
Pension Funds
Family Offices
Wealth Managers
About
Disclaimer

   Investment Thoughts - Chart Gallery

Market Cap/GDP and GDP/Capita
"Governments should encourage the growth of equity markets, because they tend to be associated with economic development. Whether or not they actually cause economic development — or whether the causality works the other way around — is the subject of some debate. What is undeniable, however, is that countries with larger equity markets tend have a higher standard of living."

 

Excerpt from the full report:

 

"A scatterplot of 53 countries (Figure 7) plots equitization (market capitalization-to-GDP) against wealth (GDP-per-capita) and shows a clear relationship between the two. Here we see that the world’s richest country (Switzerland) also has one of its largest equity markets (160% of GDP). Poor countries such as Bangladesh, Nigeria and Vietnam have much smaller equity markets (< 10% of GDP)."

 

 

Figure 7. Market Cap/GDP and GDP/Capita for the World’s 53 Largest Economies in 2014

 

Source: Haver Analytics Citi Research

 

 

"Of course, there are outliers. South Africa has a considerably larger equity market (80% of GDP) than its income level would seem to justify. Conversely, Qatar and Norway look undersized in equity terms, relative to their wealthy populations. In all three cases, these deviations are driven by privatization policy towards natural resources: South Africa’s miners are largely listed (and have significant overseas assets), while the energy sector in Norway and Qatar remains in state hands. Other outliers include Ireland and Austria, whose equity markets were both laid low by the financial crisis of 2008, which led to the renationalization of some listed banks. China is one to watch: in our chart, it looks in-line with other markets of its income level (8% market cap), but that is because MSCI currently excludes the local Ashare market due to restrictions on foreign investment. As these shares become more investable and are eventually included by MSCI, as seems likely, China’s market cap/GDP will rise substantially."


 

Citi GPS: Global Perspectives & Solutions, The Public Wealth of Nations, June 2015-Andrew Howell, Citi Frontier Markets Equity Strategist

30.03.2016


 

Themes

 

Asia

Bonds

Bubbles and Crashes

Business Cycles
Central Banks

China

Commodities
Contrarian

Corporates

Creative Destruction
Credit Crunch

Currencies

Current Account

Deflation
Depression 

Equity
Europe
Financial Crisis
Fiscal Policy

Germany

Gloom and Doom
Gold

Government Debt

Historical Patterns

Household Debt
Inflation

Interest Rates

Japan

Market Timing

Misperceptions

Monetary Policy
Oil
Panics
Permabears
PIIGS
Predictions

Productivity
Real Estate

Seasonality

Sovereign Bonds
Systemic Risk

Switzerland

Tail Risk

Technology

Tipping Point
Trade Balance

U.S.A.
Uncertainty

Valuations

Yield