Global Stock Rally: World Market Cap Reached Record High In December

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 December. Here are some highlights:

1. As of the end of December, the total value of equities in those 58 major stock markets reached $65.3 trillion and set several milestones. First, global equity values established a new all-time monthly record in December (see chart above). Second, for the second straight month, the $65.3 trillion of global stock market capitalization in December 2013 exceed the previous cyclical record monthly high of $62.8 trillion in October 2007, several months before the global economic slowdown and financial crisis started, and caused global equity values to plummet by more than 50% (and by almost $34 trillion), from $62.8 trillion at the end of 2007 to only $29.1 trillion by early 2009 (see chart). The record high $65.3 trillion world stock value in December was $2.5 trillion (and 4%) above the previous pre-recession peak.

2. Global equities gained almost $2 trillion in value during the month of December, and increased by 3% from November.

3. In 2013, world stock markets gained $10.6 trillion in value, rising from $54.67 trillion in December 2012 to $65.3 trillion last month. The 19.4% increase in world equity value last year was led by a 22.0% gain in the Americas, followed by increases of 21.6% in the Europe-Africa-Middle East region and 8.8% in the Asia-Pacific region.

4. By individual country, the largest year-over-year gains in December were recorded in the UAE (61.4%), Greece (56.4%), Ireland (56.1%) and Argentina (55.0%). In the US, the NASDAQ capitalization increased by 32.8% and the NYSE by 27.4%. The biggest losses in equity value over the last year (measured in US dollars) were posted in Turkey (-25.2%), Colombia (-15.4%) and Peru (-13.5%). The number of countries with positive increases in equity valuation in 2013 (34) outnumbered countries with declines in stock market value (16) by more than two-to-one.

Compared to the recessionary low of $29.1 trillion in February 2009, the total world stock market capitalization has more than doubled (a 124.4% increase) in less than four years to the current record level of $65.3 trillion in December; more than recapturing all of the global equity value that was lost due to the severe global recession and the various financial, mortgage and housing crises in 2008 and 2009. The global stock market rally over the last five years to a record high in December has added back more than $36 trillion to world equity values since 2009, and demonstrates the incredible resiliency of economies and financial markets to recover and prosper, even following the worst financial crisis and global economic slowdown in at least a generation.

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