In Seven Trading Days, $4.5 Trillion Was Wiped Off The Value Of Equities Worldwide

chartWorld financial assets decline

In seven trading days from July 26, $4.5 trillion was wiped off the value of equities worldwide, according to the Telegraph. Check again when markets open after the big US downgrade and that number could get higher.What does this mean for the global recovery?

For a bit of perspective we looked at McKinsey’s new report on global capital markets. Published last week, the big headline was that global financial stock (equities plus debt) grew by $11 trillion in 2010, surpassing its 2007 level.

Subtract $4.5 trillion from that figure and it doesn’t look so good. Now many including Nouriel Roubini say a global double is likely.

McKinsey’s report can be downloaded as a 40-page PDF here, but we’ve pulled out the best charts for you.

Global equity capitalisation remains below peak

The majority of the $387 billion in global net equity issuance came from emerging markets

Almost half of IPOs in 2010 occurred in China

Global debt to GDP increased from 218 per cent in 2000 to 266 per cent in 2010

China emerged as the largest issuer of non-securitized loans

Securitization lending was the fastest-growing segment with a 13% annual rate from 2000 to 2008 and 80% of this occurred in the U.S. Now future prospects of securitized assets remain unclear.

Government debt has increased by $9.4 trillion since 2008

Government debt has risen to unprecedented levels in developed countries.

Emerging markets account for only 18% of global financial stock, but their share have tripled since 2000.

First here's a map of cross-border investing in 1999. Lots of flows between North America and Europe and Japan

10 years later major flows have opened to emerging markets in Russia and Eastern Europe, Asia and the Middle East

Despite growth in emerging market debt issuance, America remains the world's debtor

There are even bigger secular changes in store

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