China's Total Market Cap? Don't Ask!

Here's a fascinating little detail for all of those who insist on pointing to China as the cause of the meltdown earlier this week.

Consider this factoid: The combined value of China's Shanghai and Shenzhen stock markets - the total market capitalization - was $400 billion at the end of 2005; over the next 18 months, it nearly tripled, with especially strong gains over the last six months. After this week's 8.8% plunge, it is a mere $1.4 trillion dollars.

To put that into some context, the New York Stock Exchange has a global capitalization of ~$22.3 trillion. The Nasdaq is worth another $4.19 trillion dollars. Add in the Amex and figure the net total cap in the US is between $27 and 28 trillion dollars

Bottom line? By my back of the envelope calculations, our correction of 3.5% wiped out an estimated $1 trillion dollars in combined NYSE/Nasdaq 100 value -- more than two thirds of the entire capitalization of both of China's exchanged combined.

Hence, I doubt that China (alone) is responsible for what happened here . . .

Comments

[farside:]

So...let me try to wrap my mind around this: The cental bank (Fed) cannot extract the capital it "requires" from the soveirgn entities through deflation of the currency to carry on it's currency war, so....they now they want to lend directly to the public sector for why? Oh... so they can compete directly with our national entities that "cannot" print their own capital eventually monopolizing the national lending system for why? Oh... so they can easily direct capital allocation in the public sector for why? Oh... for national security reasons. I thought we were here to make money, not for control! Please someone who knows what is really going on here set me straight. I am starting to believe we are heading down a road with no return.

2008 Dec 29 01:43 AM

[farside:]

So... let me wrap my mind around this. The central bank (USD Fed) apparently cannot extract the capital it requires from the soverigns to do battle in it's currency war through deflation of the dollar and now they want to lend directly to the US public sector for why? Oh... so they can compete with the US public sector banks who cannot "MAKE" their own capital and eventually in "the private sector" be able to direct and destroy what national entities are capitalizes (especially banks), virtually destroying the playing field, but for why? Oh... National security I understand. I thought we were here to make money, not enacting control measures that we will never be able to recall. Am I off on this, please reply.

2008 Dec 29 01:58 AM