A generation ago, Japan ruled the financial world and Americans were panicking about Japan Inc. taking over the U.S. Hollywood made movies about it; books were written about it, some that were even turned into movies; pop stars even sang about it. The mania reached its apogee when Mitsubishi purchased the iconic Rockefeller Center. And why not? The Japanese economy and its financial markets had experienced an astonishing and unprecedented 40-year growth, that seemed destined to continue. Ah, but how times have changed.
In 1989, Japan accounted for 45% of the global stock market by market cap, with the benchmark Nikkei 225 Index growing 900% just between 1982 and 1989; the real estate value of just one single park in Tokyo was worth more than all of the real estate in the state of California combined! Seven of the world's top ten companies were Japanese conglomerates.
Fast forward today...The five FAAMG stocks are worth 20% more than the entire Nikkei 225. It's again the U.S. that dominates global equity markets, accounting for 56% of market share by market cap; Japan just 7%. Seven of the ten biggest companies are American. No Japanese company is even in the top 10 or even top 30.
Another interesting change...back in the 1980s, 8/10 biggest companies were either Financials (5) or Energy (3). Today, on two are: Saudi Aramco (Energy) and Berkshire (Financials). Five (AAPL, MSFT, GOOG, FB and TCN) are Technology and three (AMZN, TSLA and ALBA) are Consumer Discretionary. Shows the impact of falling rates. And that change is constant.
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