The IMF recently announced that China has surpassed the US as the world’s largest economy. And just as China’s economic output has picked up steam, so too has the growth of China’s equity markets.
But although Chinese equity markets have grown significantly in recent years, on a relative basis they are still dwarfed considerably by US equity markets. This relationship is evident in the market cap weighted FTSE All-World Index that excludes the mainland listed China A-shares. China only comprised 2.1% of the index as of month end November, relative to a 50.9% weighting for the US. Even with China A-shares included as demonstrated by the FTSE All-World non-R/QFII Index, China’s weight comprises only 3.9%.