A matter of proportion

Today’s chart is a simple but striking reminder of how concentrated global equity markets have become. The market cap of the 10 largest US companies now stands around $24.5 trillion — larger than China’s entire GDP. Even more telling, the top five US tech names alone are worth roughly $17.6 trillion, which is more than the combined GDP of Japan, India, the UK, France and Italy, and far above the total market cap of MSCI China. To put individual names in context, Nvidia’s valuation is roughly equivalent to Germany’s GDP, Microsoft matches India’s GDP, and Apple is bigger than the UK economy. In other words, investors are increasingly attributing more value to a handful of companies than to the annual wealth created by whole countries — a level of concentration that deserves attention from any long-term allocator.