The world’s biggest and most successful companies are listed in the United States, making it the most important market for investors.
This is the view of Vestact CEO Paul Theron, who published a chart with data from Goldman Sachs comparing the equity market capitalisation per country.
The chart, based on December 2022 data, shows that the United States is by far the largest equity market, with a market capitalisation of $41 trillion.
China, including Hong Kong, is second with a market capitalisation of $15 trillion, followed by Japan with $5 trillion.
South Africa, in comparison, only has a market capitalisation of $0.39 trillion, even though many global powerhouses are listed here.
The New York Stock Exchange (NYSE) and Nasdaq give investors access to the top companies in the world, like Apple, Microsoft, Google, Meta, and Berkshire Hathaway.
The United States is where global super investors invest most of their money and is the world’s financial capital.
For South Africans, investing in the United States has the added benefit of diversification and protecting against currency weakness.
The investment universe in the United States, through the NYSE and Nasdaq, is also much larger than on the Johannesburg Stock Exchange (JSE).
Investors, therefore, have a broader range of companies to choose from, increasing the number of opportunities and diversification options.
And then there is performance. Over the last ten years, the S&P 500 produced a much higher return than the JSE All Share index.
Equity market size
The chart below shows the total equity market capitalisation by country.