A Testament To The Resilience Of Markets: World Stock Market Capitalization Is Nearly Back To Pre-Recession, Pre-Crisis Levels

Includes: DIA, QQQ, SPY
by: Mark J. Perry

The Paris-based World Federation of Exchanges (WFE), an association of 58 publicly regulated stock market exchanges around the world, recently released updated data on its monthly measure of the total market capitalization of the world's major equity markets through the end of September. Here are some highlights:

1. As of the end of September, the total value of world equities in those 58 major stock markets reached $60.7 trillion, the highest monthly world stock market capitalization since October 2007, several months before the global economic slowdown and financial crisis started and caused global equity values to fall by more than 50% and by almost $34 trillion (see chart above).

2. The total value of global equities increased by $3.3 trillion from August to September, which is the sixth largest monthly gain in world equity values in the history of WFE data back to 1995.

3. Compared to a year earlier, September's world stock market capitalization increased by 14.8%, led by a 18.6% gain in the Europe-Africa-Middle East region, followed by gains of 13.6% in the Americas and 13.1% in the Asia-Pacific region.

4. By individual country, the largest year-over-year gains were recorded in Greece (117%), Argentina (58%), Ireland (41%) and Japan (31%). In the U.S., the NYSE capitalization increased by 20.4% and the NASDAQ by 15.3%. The biggest losses in equity value over the last year were posted in India (-19%), Peru (-18.2%) and Egypt (-17.9%).

5. The September world stock market capitalization of $60.7 trillion was the second highest level in history and was just 3.3% below the pre-recession peak, and all-time record high of $62.8 trillion of global equity values in October 2007.

Compared to the recessionary low of $29.1 trillion in February 2009, the total world stock market capitalization has more than doubled (increase of 109%) over the last 4.5 years to the current level of $60.7 trillion, recapturing almost all of the global equity value that was lost. The global stock market rally over the last four years has added back more than $31 trillion to world stock market values since 2009, and demonstrates the incredible resilience of economies and financial markets to recover, even following the worst financial crisis in generations.