China’s 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 (NYSE) has a global capitalization of ~$26 trillion. The Nasdaq is worth another $17 trillion dollars.

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

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


UPDATE:   March 1, 2007 8:55 am

The "Bloomberg machine" (as one of my early mentors called it) shows the NYSE is $22.3 trillion cap, the Nasdaq comp at $4.19 trillion cap. Add in the Amex and figure the net total cap in the US is between $27 and 28 trillion dollars

Category: Data Analysis, Markets, Psychology

StandUp Economist: 10 Principles of Macro-Economics

Mankiw’s 10 principles of economics, translated for the uninitiated. Presented at the AAAS humor session, February 16, 2007. Transcript and additional details can be found here. Print version: Mankiw’s Principles #1. People face tradeoffs. #2. The cost of something is what you give up to get it. #3. Rational people think at the margin. #4….Read More

Category: Digital Media, Economy

Market Events & the Blogosphere

Category: Digital Media, Financial Press, Weblogs

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Category: Data Analysis, Investing, Markets

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Category: Weblogs

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Category: Media

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Category: Commodities, Currency, Federal Reserve, Index/ETFs, Investing, Markets, Psychology

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Category: Investing, Markets, Psychology