World stock market cap & China ETFs

Hey guys, I found a nice website tracking the World stock market cap:

https://focus.world-exchanges.org/issue/september-2018/market-statistics

According to it, the current market cap of the World is $85.5 trillion.

USA accounts for $35 trillion, so 41%, much less than 55% in VT.

Interestingly, China&India have a market cap of $15.5 trillion, 18% of the World. Much more than the typical share of the whole EM in an All-World ETF.

Kind of sad that we cannot really invest in the whole World.

  • The FTSE Global All Cap index (base for VT) has a market cap of $53 trillion and 7900 companies
  • compared to the mentioned $85 trillion of actual World market cap and 52’000 companies!

Just think about it:

  • in VT, you invest 55% in USA and 4% in China&India, easily a 10:1 ratio
  • where actually it’s 41% and 18%, closer to a 2:1!
5 Likes

Awesome stuff. I guess this brings us back to the topic - how can we invest more in China without overweighting the few main public stocks:

PS. Just for reference, we already had a thread about this:

I’m really worried about my memory. I don’t remember what I did just a few months ago…

I can’t give a general answer, but I can tell you what I plan to do.

I’m watching this MSCI China-A ETF

and plan to start purchasing when the trend shows sings of reversal

you mean you want to buy when its cheaper than today. what if it’s never?

Edit: I checked the actual chart and see the trend is bearish. So you mean you wait until it starts going up again? Did you check how big is the market cap of the index?

Why this fund? How is it different from my Chinese stocks in VT?

This ETF are A shares and I think VT has B shares.

Ok, now I get it:

The three categories of Chinese stocks

Chinese A-stocks (A-Shares): Stocks of Chinese companies that are listed on the Shanghai or Shenzhen stock exchange and traded in local currency.

This category has been exclusive to Chinese investors. However, professional foreign investors with a special license are able to invest in these stocks under certain restrictions.

Chinese B-stocks (B-Shares): Stocks of Chinese companies that are listed on the Shanghai or Shenzhen stock exchange and traded in foreign currency.

This category has been open for foreign investments. Since the restrictions on A-Shares have been lowered, these shares tend to be losing liquidity.

Hong Kong H-stocks (H-Shares): Stocks of Chinese companies that are listed on the Hong Kong stock exchange and traded in Hong Kong Dollar (HKD).

This category has been open for foreign investments as well. Most institutional investors prefer H-stocks due to their relatively high liquidity.

Yes I actually expect it to fall more and expect it to reverse at the same time as other Chinese ETFs and emerging markets in general. There is a chance that it could already be at its low point as it now matched the Feb 2016 lows and bounced.

China-A shares are traded on the domestic market. They are the most volatile.

But then why Lyxor and not for example this (cheaper) one:

Or this one:

They cost roughly the same actually (TER 0.6 - 0.65%).
Lyxor because it’s listed on SIX and I’m still with CT.

1 Like


CSI 300 index (Top 300 A-Shares) another 2% lower which brings it again closer to multiyear lows in price as well as historical lows in P/E and P/B ratios.

According to:
https://www.ceicdata.com/en/indicator/china/pe-ratio
the P/B was at it’s lowest in May 2014 at 9.59

According to Bloomberg now at 11.21
https://www.bloomberg.com/quote/SHSZ300:IND

1 Like

I found the factsheet of the index: http://www.csindex.com.cn/uploads/indices/detail/files/en/000300factsheeten.pdf

It’s interesting. This CSI looks like it’s a Chinese equivalent of FTSE or MSCI.

Another interesting part is when I check the market cap. It says:

  • constituents total market cap: 27’300 CNY Bn (4’000 USD Bn)
  • index market cap: 10’500 CNY Bn (1’500 USD Bn)

What’s the difference here? My guess is it’s about the “non-negotiable” shares (shares that you cannot trade).

Btw I also found:

  • CSI 800: that’s CSI 300 + CSI 500, large, mid and small cap ($5 trillion market / $2 trillion index)
  • CSI China A: all 3000 stocks ($7 trillion market / $3 trillion index)

But sadly no ETFs for these.

2 Likes

MSCI China A and CSI 300 mostly overlap (the MSCI has 400 constituents) so this is indeed not a very good representation of the entire A-shares landscape.

I also found no CSI 800 ETF, but a quick search returned the:
Xtrackers Harvest CSI 500 (AMEX:​ASHS)

1 Like

Found one that has it all:


1 Like

It still makes me wonder, the one you found follows MSCI All China, which has a market cap of $3tn. The total market cap of Shanghai, Shenzhen and Hong Kong however is $11tn. Where are the missing $8tn? I don’t think they are all non-negotiable.

The CSI Free float has 3546 Constituents
http://www.csindex.com.cn/en/indices/index-detail/000902

still considerably more than CSI 800, but I don’t think there’s as much as $8tn left out. I don’t think entire Hong Kong counts towards Chinese shares either.

It’s a bit like MSCI Poland, it’s basically the WIG20 ($60bn), widely ignoring hundreds of companies of the broad WIG ($160bn).

I wonder how these discrepancies affect actual country weights in All-World indices…

There are no “weights” for countries! They just take the company by its market cap. If they can’t get a certain company, they just don’t take it into the index. They don’t compensate some companies missing in country X by adding more companies of that country.

Oh but there are, indirectly.

If 100% of US Market Capitalization qualifies for the VT, but only 10% of Chinese does, then you get an incorrect ratio of 10:1 which you’ve only just complained about. The imperfection lies in the underlying index and a narrow choice of stocks from some countries, while others are broadly represented.

There’s also Vanguard Total China ETF:
https://www.vanguard.com.hk/portal/v/total-china.htm?lang=en

45% are A shares.
TER is 0.40%.

Number of holdings 904 (1,123 in benchmark) -> 45% * 904 = ~406 A-shares holdings
Median market cap 216.0 B (220.2 B in benchmark).

2 Likes
By reading and partipating to this forum, you confirm you have read and agree with the disclaimer presented on http://www.mustachianpost.com/
En lisant et participant à ce forum, vous confirmez avoir lu et être d'accord avec l'avis de dégagement de responsabilité présenté sur http://www.mustachianpost.com/fr/