China's Market Cap? Don't Ask!

Thursday, March 01, 2007 | 04:30 AM

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

Thursday, March 01, 2007 | 04:30 AM | Permalink | Comments (23) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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This correction was due, and has brought the sentiment squarely back into the bulls wheel house! It was caused by (the spark) China's 9% plunge, Elmer Greenspan's sloppy (misquoted) remark, and prior weakness in India....and yes complacency from all the "record number of days without a X% correction". Fear (and respect) is good, and is back.

Complaceny, cockiness, and a sense of "entitlement" is now firmly in the Ursine camp...Record TRIN, 99% down volume, record short interest, (multi day) high put call, all should give the bulls some fresh wind at their backs.

Posted by: Clark Kent | Mar 1, 2007 5:15:15 AM

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