November 2 that the Spanish “Economist” website published a report titled “Securitization in a crisis is China and the United States, and the losers are Europe” on October 31.
The author is a journalist, Daniel Ye Fra, the report pointed out that Sweden, China, and the United States were the economies with the largest growth in securitization during the new crown pneumonia epidemic. The full text is excerpted as follows:
The ratio of the size of the stock market (the total capital of a country’s listed companies) to the gross domestic product (GDP) reveals the basis of a large economy. It helps to understand the growth pattern of a country, the financial literacy of the population, and the type of company.
The higher the degree of securitization, the more open the system is. In this system, the company is huge and the leader of the economy, usually using the market to raise funds for itself.
The stock market to GDP ratio in the US, Switzerland or Sweden is close to 200%. The lower the degree of securitization, the smaller the scale of the company, the higher the degree of banking, and the greater the dependence on traditional credit.
china vs united states economy
china vs united states economy Underdeveloped economies such as Turkey or Mexico (whose stock market only accounts for 30% of GDP), or Eurozone countries such as Italy and even Germany (with securitization ratios of 33% and 59%, respectively) are examples of this type of economic performance.
According to the latest forecasts of the International Monetary Fund (IMF), Sweden, China and the United States are the economies with the largest growth in securitization during the COVID-19 pandemic, with growth of 18, 13 and 11 percentage points respectively, while European countries’ securitization ratios have fallen the most , In addition to Brazil and the United Kingdom.
The UK has always been a model of financialization, but now the securitization ratio has dropped from 125% in 2019 to about 100%, showing the consequences of Brexit and the special impact of the epidemic.
china united states economy
china united states economy After the spring blockade triggered an unprecedented shock to supply and demand, the world’s largest stimulus plan and monetary and fiscal plans were launched worldwide, but they did not prevent the asymmetry of the recovery.
The analysis of the stock market to GDP ratio (securitization) clearly shows the future economic prospects, and four conclusions can be drawn: First, the two major countries of China and the United States are undergoing post-crisis economic reconstruction, and the markets of these two countries continue to grow. ; Second, Wall Street still has hegemony; third, the consequences of Brexit are self-evident; fourth, the euro zone is in decline.
The total capital of the world’s top 20 stock exchanges currently accounts for 92% of the world’s GDP, which is 8 percentage points lower than the historical high of 100% in 2017. On the one hand, the decline can be attributed to the impact of the crisis in world economic activities. The IMF predicts that the world economy will decline by 4.4% in 2020; on the other hand, it is mainly due to a double-digit decline in European stock indexes.
is china’s economy better than the united states
is china’s economy better than the united states The most interesting thing is China, which is the first to emerge from the epidemic and become the undisputed competitor of the United States. China’s reliance on banks is getting lower and lower, while the market size is getting bigger and bigger, with the securitization index rising from 45% to 58%.
According to estimates by large official agencies, this year the Asian giant is not only the only major economy that will not shrink, but the economy will grow by about 2%.
The German Allianz Research Company pointed out that China’s exports have unexpectedly increased this year, and the trade balance has clearly made a positive contribution to GDP growth.
Similarly, the total capital of its stock market has increased by more than 30% this year. The current value of China’s stock market is 7.6 trillion euros (1 euro is about 7.85 yuan-note on this website), which is expected to account for 58% of GDP by the end of 2020.
In large economies, this ratio is still lower than the United States and Japan (194% and 123%, respectively). However, experts pointed out that China has made considerable progress in opening up its capital market.
china the united states and the global economy
Since its launch in 2014, the Shanghai-Hong Kong Stock Connect program has attracted a net inflow of 170 billion U.S. dollars (1 U.S. dollar equals 6.72 yuan-this net note) of foreign capital, and the Science and Technology Innovation Board has promoted capital investment into the innovation market.
The securitization ratio in the United States is 194%.
This high ratio can be explained by its strong corporate stock culture. American companies prefer to raise their own funds instead of going to the bank to apply for loans. Another reason is that investors tend to transfer their savings to the stock market.
