Top 20 MSCI ACWI stocks 60x larger than average, ratio doubles in 7 years
The average market cap of the top 20 stocks in the MSCI All-Country World Index is now 60 times larger than the average of the other ~2,500 constituents, up from below 25x between 2006 and 2017, driven by US mega-cap tech stocks.
Global equity market concentration has reached an extreme, according to a research note from The Kobeissi Letter. The average market capitalization of the top 20 stocks in the MSCI All-Country World Index (ACWI) is now 60 times larger than the average stock among the remaining roughly 2,500 constituents.
This ratio has doubled over the last seven years, driven primarily by US mega-cap technology stocks. For context, the ratio never exceeded 25x during the period from 2006 to 2017.
The note also highlights a parallel concentration in emerging markets: semiconductor-heavy Taiwan and South Korea together account for about 49% of the MSCI Emerging Markets Index, more than double China's 21% weight. This disparity is stark given that the combined GDP of Taiwan and South Korea (~$3.0 trillion) is only 14% of China's $21 trillion economy.
Tech companies are increasingly dominating global equity indices, both in developed and emerging markets.
Source: The Kobeissi Letter