On December 12th, the US stock market lost a full percentage point of its share of total world stock market cap. As shown below, the US’ percent of world market cap had been trending higher for most of 2019 as domestic stocks outperformed internationals. By the end of November, the US share of world market cap had gotten above 41%, but on December 12th, it fell to 39.66%. Can you think of what caused the dramatic drop?
If you immediately thought of the recent Saudi Aramco IPO, congrats. When Saudi Aramco went public earlier this month, its sheer size had a major impact on global stock market weightings. With a $1.9 trillion market cap, Saudi Aramco is easily the largest company in the world, topping the largest US company — Apple (AAPL) — by more than $650 billion. As shown below, the Saudi Aramco IPO pushed Saudi Arabia’s percentage of total world stock market cap from a mere 0.61% up to 2.8%. This means Saudi Aramco on its own makes up roughly 2.2% of total world market cap.
At 2.8%, Saudi Arabia now has the seventh largest stock market in the world behind the US, China, Japan, Hong Kong, the UK, and France.
Below we show current country stock market weightings compared to where they stood at the start of 2019, on Election Day 2016, and ten years ago at the end of 2009.
Saudi Arabia has seen the biggest increase of any country this year, while the US’ share is up the second most at +1.23 percentage points. (Prior to the Aramco IPO, the US had gained roughly 2.2 percentage points on the year.) China’s share has also gained in 2019, but its weighting has fallen 1.89 percentage points since Trump was elected, while the US has seen its share rise 3.28 percentage points over the same time frame.
Hong Kong has lost the most market share this year with a drop of 0.67 percentage points (6.95% down to 6.28%). Other countries that have seen their percent of world market cap decline in 2019 include Japan, the UK, India, and South Korea.
Over the last ten years, the US has seen by far the biggest increase in weighting at +9.89 percentage points. The only other countries to make notable gains this decade are China (+2.07 ppts) and Saudi Arabia (+2.10 ppts). Most other countries have lost share this decade, with the UK down the most at 2.52 percentage points. At the end of 2009, the UK had a solid 6.47% weighting of world market cap, but it’s down in the 3s now. Sign up for Bespoke’s “2020” special to read the “International Markets” section of our 2020 Outlook report.