Thursday, March 10, 2005

Mapping the Global Capital Markets

The Mckinsey Quarterly includes a survey of the world's capital markets that makes for very interesting reading.

On size...
global capital markets are huge: we calculate that the world's financial assets now total more than $118 trillion and will exceed $200 trillion by 2010 if current trends persist. The stock of global financial assets has grown faster than the world's GDP, indicating that financial markets are becoming deeper and more liquid. With a few qualifications, this trend bodes well for the world's economies, since deeper markets provide better access to capital and improve the allocation of risk.
On the geographical breakdown (and poor Latin America)
The United States has a unique position not only as the world's largest financial market but also as the global hub and conduit of capital. With the creation of the euro, however, European financial markets are integrating and gaining share. Japan's financial markets are becoming less important in the global financial system, while China's are growing rapidly. Financial markets in the rest of the world—including Singapore and all of Latin America—are negligible in a global context. Latin America's financial markets are notably underdeveloped compared with those of middle-income countries in other regions: despite representing over 4 percent of global GDP, Latin America has less than 2 percent of the world's total financial assets.


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