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Saturday, June 7, 2014

COMPARING THE STOCK MARKETS OF THE USA, CHINA AND JAPAN

The Dow Jones Industrial Average only uses 30 companies and is today at an all-time high of 16,924:


The total market index of the USA has a worth just under $21 trillion.  While the climb began soon after Republican Ronald Reagan became president in 1982, the real jump came during the reign of Democratic President Bill Clinton in the mid-ninties.  President Barack Obama saved the world from a possible depression, with stocks today at all time highs, but, for I guess other reasons, his popularity stands today at 50%.

A case can be made that the Dow only has 30 stocks, so its performance can be misleading.  But, ah, the S&P also happens to stand today at an all-time high of 1949, and they use 500 firms:


While you can't really accurately compare the stock markets of the world in any truly accurate manner, because of weighting, scaling and such, it is interesting to note that while the USA stock market is at the highest, ever, China and Japan are not.

The Shanghai Composite Index (SSE) of China includes 872 companies and is approaching a worth of $4 trillion or one-fifth that of the U.S.:


Note that the 1991 base value is 100, so the close yesterday at 2,029 means that the value has increased by a factor of a little over 20 in 23 years.  The all-time high of 6,124 was attained on 16 October 2007, which indicates that the value today is just about exactly one-third of that max.  In short, China is not doing particularly well today, led by President Xi Jinping.  He won his position on a 2,952 to 1 vote of the National People's Congress.  No official popularity polls in the country.

The Nikkei 225 (because it consists of 225 companies) or Japan Nikkei is worth $4.5 trillion and yesterday closed at 15,077:


After the Great Tohoku Earthquake / Tsunami, the Nikkei on 11 March 2011 sunk to 7055,  Thus, the market has more than doubled since that cataclysm.  However, the Nikkei reached a high of 38,957 on 29 December 1989, and is therefore today only 38% at that high.  

My recent trip to Japan gave me an impression that the people are ebullient about their economic upturn and Prime Minister Shinzo Abe has a 60% popularity rating.  I'm afraid they are only reacting to the present.  The fact of the matter is that Japan is not doing well at all, but, perhaps, better than China.  The USA is doing fine, indeed.  But for how long?

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