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