The seven largest American publicly-traded companies are worth more than all the stocks from France, the UK, China and Japan combined. This and more interesting facts can be found in Schroders’ Equity Lens report.
Which chart or table best illustrates what has happened on the stock markets so far this year? For Schroders, it’s quite simple: it’s the unprecedented comeback of American Big Tech and the comparatively smaller stock exchanges elsewhere in the world.
As of July 31, the seven largest American companies collectively had a greater weight in the MSCI ACWI index than all the stocks from China, Japan, France, and the United Kingdom combined.
And this is happening while these other stock markets have also performed reasonably well. For example, the CAC40 was up by 11.7% in the middle of this week, and the Japanese Topix index had nearly a 24% gain.
The American top 7 includes Apple, Microsoft, Amazon, Alphabet, Tesla, Meta, and Nvidia. Apple and Microsoft, with market caps of $2.92 trillion and $2.44 trillion, are the giants among giants. In 2023, Apple has seen a 38% increase in its stock price, and Microsoft has seen a 32% increase. That’s quite remarkable for companies already considered heavyweight players.
This is one of several noteworthy developments highlighted in Schroders’ Equity Lens for August.
Did you know, for instance, that the number of publicly-listed companies in Europe and the US is rapidly decreasing? The number of listed companies in London is now 60% lower than in 1996 (1,100 versus 2,600).
In Frankfurt, the decline is slightly less severe, at 40%. Amsterdam has also lost many funds, and what has been added is often of foreign origin.
Schroders further states in the report that the long-term return prospects for stocks are still higher than for cash, despite the high short-term interest rates and relatively high valuations. But be cautious; “it can be a bumpy ride,” warns the British asset manager.
Another chapter discusses valuations. It might seem that the US only has expensive stocks, but that’s not the case. Schroders shows that US small-cap stocks are quite affordable compared to their long-term averages, both in terms of price-earnings ratios (based on known earnings) and forward P/E ratios (what analysts predict for earnings).
Speculating against US stocks is risky. Schroders’ data shows that since 2013, there have been only two years (2017 and 2022) when US stocks clearly performed worse than the rest.
In all other years, they were the best or nearly the best. In 2022, the British stock market had the dubious honor of being the best performer, with a loss of 4.8%.
