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US Stocks to Fall 36%, China Stocks to Fall 66%!

Over the last 12 months, Chinese listed stocks have experienced an increase in market cap of $6.435 trillion – the largest twelve month increase for any country’s market cap in history. The previous record twelve month market cap increase of $5.811 trillion was set by US stocks during the twelve months ending March 2010, after US stocks bottomed in March 2009 during the global financial crisis.

uschinamarketcapchangettmLast month,¬†China’s two stock exchanges the Shanghai and Shenzhen together accounted for a record 56.07% of the world’s total stock market dollar volume. America’s two stock exchanges the NASDAQ and NYSE together accounted for only 24.03% of the world’s total stock market dollar volume – a new low for the past decade.

uschinadollarvolumepercentofglobalChina listed stocks currently have a total market cap of $10.272 trillion vs. their 10 1/2 year volume weighted average market cap of $3.536 trillion. Eventually, China’s total market cap will return to its volume weighted average market cap – and this would currently require China stocks to decline in value by 65.57%.

In December 2007, China listed stocks topped out with a total market cap of $4.479 trillion. At the time, China’s volume weighted average market cap was $1.451 trillion and Chinese stocks needed to decline by 67.6% to match it. Over the following 10 months, China stocks declined in market cap by 62.4% to an October 2008 bottom of $1.684 trillion – dipping below their then volume weighted average market cap of $1.716 trillion.

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US listed stocks currently have a total market cap of $27.066 trillion vs. their 10 1/2 year volume weighted average market cap of $17.437 trillion. Eventually, America’s total market cap will return to its volume weighted average market cap – and this would currently require US stocks to decline in value by 35.58%.

In March 2009, US ¬†listed stocks bottomed during the global financial crisis with a total market cap of $10.114 trillion. At the time, America’s volume weighted average market cap was $16.774 trillion¬†and US stocks needed to rise by 65.85% to match it. Over the following 13 months, US stocks increased in market cap by 63.6% to an April 2010 short-term peak of $16.548 trillion – rising above their then volume weighted average market cap of $16.216 trillion.

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