World m-cap drops below $100 trn as Fed cuts rates, war continues

India's market ranking has once again slipped to seventh position as a variety of crises bother investors

The world market’s capitalisation—the value of all companies listed universally—has slipped below $100 trillion for the first time since December 2020.

It follows a rout in global stocks triggered by the US Federal Reserve’s decision to aggressively tighten monetary policy to fight inflation. The selloff was excrabetated due to disruptions caused by China’s strict Covid containment policies and the Russia-Ukraine conflict.

According to Bloomberg data, over $22 trillion of global market cap has been erased this year amid the Federal Reserve’s decision to reduce its $9-trillion balance sheet. On May 12, the total world market cap stood at $99.13 trillion—lowest since December 1, 2020. At the peak, the world market cap had climbed to $122.5 trillion, while at the nadir of the covid-19 selloff it had dropped to $61.6 trillion.  

The US central bank’s decision to double its balance sheet from $4.5 trillion and keep interest rates near-zero following the covid-19 crisis led to global liquidity boom benefitting, with large part of it flowing into risky assets such as stocks and cryptocurrencies.

Among the top-10 world markets, China, Germany and France  have seen the maximum drop in market cap this year in percentage terms. In absolute terms, the maximum damage has been caused by the US, which has seen a massive selloff in technology stocks.

India’s market capitalisation has come off by 12.4 per cent year-to-date to $3.03 trillion. After breaking into the top-five club in March, India’s market ranking has once again slipped to seventh position.