"G2 Market Cap Gap Widens" US Market Cap Half of World... China at 10%

Thanks to AI and Big Tech Funding Influx
China's Government Control Over IT Companies Seems to Have an Impact

The U.S. stock market has reached 50% of the global market capitalization, driven by the rapid growth of artificial intelligence (AI) and big tech companies. In contrast, the Chinese stock market's share of market capitalization has plummeted to the 10% range due to capital outflows caused by slowing economic growth and government control over companies.

[Image source=Yonhap News]

According to an article on the 6th citing data from the financial information firm Quick and FactSet, as of the 2nd, the total market capitalization of U.S. companies was $51 trillion (approximately 67,855 trillion KRW), an increase of $1.4 trillion (about 1,862 trillion KRW) from the end of last year. The proportion of U.S. companies' market capitalization in the global total rose by 1.6 percentage points from the end of last year to 48.1%, marking the highest level in about 20 years since September 2003.

Meanwhile, the total market capitalization share of Chinese listed companies accounted for only 10% of the global market. It was close to 20% in June 2015 but has halved in about nine years.

The difference in fortunes between the U.S. and China was due to the vitality gap in tech companies. The U.S. stock market saw the market capitalization of just two companies, Amazon and Meta, which posted strong earnings in the fourth quarter of last year, increase by a total of $510 billion this year.

In contrast, China's largest e-commerce company Alibaba and largest IT company Tencent saw their market capitalization decrease by a total of $31 billion. Both companies were among the top 10 global market capitalization companies at the end of 2020, standing shoulder to shoulder with U.S. big tech firms, but have since been pushed down amid China's economic stagnation.

Some say that the Chinese government's strengthened control over the IT industry has led to the poor performance of private companies. According to the Peterson Institute for International Economics in the U.S., the proportion of state-owned enterprises with government ownership exceeding 50% among the top 100 Chinese companies by market capitalization reached 50% at the end of last year. Although this ratio fell to 31% by the end of June 2021 as private companies, mainly IT firms, grew, it has since turned upward again. With stronger government influence, global investors are reallocating assets from the Chinese market to India or Japan, analysts say.

The fact that the U.S. is ahead in the AI development race has also affected market capitalization. U.S. semiconductor company Nvidia, which almost exclusively supplies semiconductors for generative AI, ranks sixth in the world by market capitalization.

This content was produced with the assistance of AI translation services.