Earlier today at Bespoke Premium, we released a report showing just how off the "decoupling" theory has been during the current global bear market. During the global bull market from '03 to '07, many pundits believed that developed and emerging markets outside of the US were strong enough to not catch a cold when the US sneezed. The BRIC countries of Brazil, Russia, India, and China were probably the most talked about countries when "decoupling" came up, but as we've all seen, these countries have in fact gotten hit much harder than the US during the downturn.
This couldn't be highlighted better than in the chart below that shows both the US and the BRIC countries as a percentage of world market cap since mid 2003. As global equity markets rallied across the board from '03 to '07, the US lost a huge amount of world market share, falling from about 45% to a low of 24%. At the same time, BRIC countries went from about 4% of world market cap to nearly 16%.
Once the credit crisis hit, however, US markets fell, but the rest of the world fell even harder. And as the chart shows, the US has been steadily gaining back market share over the last year or so, while the BRIC countries have fallen. Bear market: 1, Decoupling: 0.
The US market did not sneeze, it threw up blood.
Posted by: Sia | February 03, 2009 at 01:39 AM
Deceptive chart. Why use the duel axis? The point is valid, but presented poorly.
Posted by: David3 | February 03, 2009 at 08:22 AM