As part of a discussion I was having with a friend, I brought up the recent Olympic medal analysis I had done and I said that it was almost universally applicable to most things humans create. We then started talking about the stock market and wondered if it was applicable to the stock exchanges around the world and that’s when I said, “data analysis to the rescue!”
Global Stock Exchanges
The global stock exchanges are listed below along with their respective market capitalization. The total of all exchanges in the table is $108.51 trillion. To determine which stock exchanges control 80% of the market capitalization I calculated 80% of the total value and came up with $86.8 trillion.
| Year | Stock exchange | Region | City | Market cap(USD tn) |
|---|---|---|---|---|
| 2023 | New York Stock Exchange | United States | New York City | 25 |
| 2023 | Nasdaq | United States | New York City | 21.7 |
| 2024 | Euronext | Europe | AmsterdamBrusselsDublinLisbonMilanOsloParis | 7.22 |
| 2024 | Japan Exchange Group(Tokyo Stock Exchange) | Japan | Tokyo | 6.94 |
| 2024 | Shanghai Stock Exchange | China | Shanghai | 5.92 |
| 2024 | Bombay Stock Exchange | India | Mumbai | 5.5 |
| 2024 | National Stock Exchange | India | Mumbai | 5.5 |
| 2024 | Hong Kong Stock Exchange | Hong Kong | Hong Kong | 4.06 |
| 2024 | Shenzhen Stock Exchange | China | Shenzhen | 3.48 |
| 2024 | Toronto Stock Exchange | Canada | Toronto | 3.35 |
| 2024 | London Stock Exchange | United Kingdom | London | 3.24 |
| 2024 | Saudi Stock Exchange (Tadawul) | Saudi Arabia | Riyadh | 2.72 |
| 2023 | German Stock Exchange (Deutsche Börse AG) | Germany | Frankfurt | 2.37 |
| 2023 | SIX Swiss Exchange | Switzerland | Zürich | 1.95 |
| 2023 | Nasdaq Nordic and Baltic Exchanges | Europe | Europe | 1.94 |
| Copenhagen Stock Exchange | Denmark | Copenhagen | ||
| Stockholm Stock Exchange | Sweden | Stockholm | ||
| Helsinki Stock Exchange | Finland | Helsinki | ||
| Tallinn Stock Exchange | Estonia | Tallinn | ||
| Riga Stock Exchange | Latvia | Riga | ||
| Vilnius Stock Exchange | Lithuania | Vilnius | ||
| Iceland Stock Exchange | Iceland | Reykjavík | ||
| 2023 | Korea Exchange | South Korea | SeoulBusan | 1.83 |
| 2023 | Taiwan Stock Exchange | Taiwan | Taipei | 1.59 |
| 2022 | Australian Securities Exchange | Australia | Sydney | 1.55 |
| 2022 | Johannesburg Stock Exchange | South Africa | Johannesburg | 1.36 |
| 2023 | Tehran Stock Exchange | Iran | Tehran | 1.29 |
Which exchanges take 80% of the global market cap?
- New York Stock Exchange @ $25 trillion.
- Nasdaq @ $21.7 trillion.
- Euronext @ $7.22 trillion.
- Shanghai @ $6.94 trillion.
- Bombay @ $5.5 trillion.
- National Stock @ $5.5 trillion.
- Hong Kong @ $4.06 trillion.
- Shenzhen @ $3.48 trillion
- Toronto @ $3.35
The U.S. alone has a combined cap of $46.7 trillion, nearly half of the whole.
Combining China exchanges yields $13.46 trillion.
Combining India exchanges yields $11 trillion..
Europe comes in at $7.22 trillion.
Finally, if we add Japan, China, and India to represent Asia, we have a combined total of $31.4 trillion.
Europe
The peculiar thing out is Europe, as individual country exchanges, the market caps are fairly small but when I added all the European exchanges together and came up with $13.48 trillion. Unfortunately, from an investing perspective, it’s simply too cumbersome to invest in Europe because you’d have to comb through many different exchanges.
Pareto Distribution
If you recall from the Olympic post, the Pareto Distribution is cause by:
The Pareto distribution is often caused by underlying mechanisms where a small number of factors contribute to the majority of outcomes. This distribution emerges in various natural and social phenomena, such as wealth distribution, where a small percentage of the population holds most of the wealth. The causes include:
Positive Feedback Loops: Success breeds more success, leading to concentration.
Network Effects: Larger networks attract more users or resources.
Bounded Growth: Constraints limit growth, leading to unequal distribution.
Power Laws: Certain systems inherently follow power laws, leading to Pareto-like distributions.
S&P 500
After studying the Pareto Distribution and its causes and effects, it’s one of the reasons that I now only buy S&P 500 stocks and US index funds. I do have some minor positions in European exchanges but they are somewhat inconsequential. I have considered a few India ETFs as well but that market is a bit overheated right now and the political landscape in India is always volatile. There are some other exceptions of course as well but understanding the mechanics behind the growth of exchanges does help provide clarity and insight into where I invest my money.
Share The Wealth
Do you primarily invest in a single stock exchange? If so which one? Let me know in the comments below.