This situation will be “remembered for ages,” says Duncan Lamont, head of strategic Bulk SMS Thailand research at Schroders. Even if you invest through one of the most general “global” stock market indices, the resulting portfolio will be heavily skewed towards US technology companies.
The share of the 7 largest companies has equaled that of 5 countries. Chart: Guardian
This is the MSCI All Country World Index (ACWI), which covers about 85% of “global equity investment opportunities,” as the compilers put it, tracking nearly 3,000 large and mid-cap companies in 23 developed markets and 24 emerging markets. The higher the value of a company, the higher its weight in the index.
The G7 has now grown to 17.2% of the market, compared to 17.3% for Japan, the UK, China, France and Canada. Seven US companies are equivalent to five countries. “That’s not a diversified exposure,” says Lamont.
Apple alone, with a market value of $3 trillion, is more expensive than the entire UK stock market.
This striking situation is partly due to what the second chart shows. As of last week, the value of the G7 has increased by 74% in 2023. Shares of other companies in the world that make up the same ACWI index have increased by 12%.
