Posted by: Howard Silverblatt on January 23, 2008
While world markets react to a potential U.S. recession by declining $7.9 trillion year-to-date, it is not only investors that are losing money. Unlike the United States, many countries own substantial parts of their native companies. China, which last year posted a 69.8% gain, is a case in point. The market value of their shares, as measured by the S&P/Citigroup Global Equity Indices, is $3.71 trillion, however when you adjust for float (the available shares) it is $0.59 trillion or 84.2% less. Year-to-date the Chinese market has lost over 25% of its value or $1.24 trillion - but only $0.20 trillion of that is attributed to public ownership, the other $1 trillion plus is mostly in government hands.
In addition, many sovereign investment firms have now added significantly to their U.S. holdings. While governments work for the people, more and more of them are now taking on the added role of portfolio manager. At some point, it should make for some interesting prospectus reading.