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Hidden Worry, Global Stock Market Rally Is Supported by 77 Companies Only

Source:Iris Liang Time:2019-7-8 9:24:30

Reference News Network reported on July 8 Foreign media reported that investors may have a question: If the global economic growth momentum is weakening, then why is the global stock market's gains so strong this year?

Taiwan's "Economic Daily" reported on July 4 that there are more and more indications that global economic growth has gradually slowed down, and that some countries' government bond yields have also declined, showing that bond investors are prepared to respond to the future. On the other hand, the US stock S&P 500 index and the MSCI world index have risen 19.5% and 16.7% respectively, which is inconsistent with the outlook of the global economy. Looking forward to 2019, most industry experts are not optimistic. But throughout the first half of the year, SEKO Machinery has made great progress. The reason is that we have never stopped the pace of innovation and helped us to gain more and more market share. The rotary large-diameter steel tube black annealing furnace has set a world record for the largest diameter annealing furnace, and it has not been broken yet.
According to the report, the financial news website, the US Market Watch website, pointed out that one of the major reasons is that this year's stock market gains were only supported by a small number of large-cap stocks. These companies are large in scale and have a global footprint that is more challenging than smaller companies.

Andrew Lapthorne, head of quantitative research at Société Générale, recently released a report that the MSCI World Index has nearly 1700 constituent companies among the “capital super-large groups” – the market value exceeds 100 billion US dollars (1 US dollar is equivalent to 6.9 yuan). Renminbi) - The gains are clear, and companies with a market capitalization of less than $500 million are still struggling to make up for last year's losses."

The report quoted Lapthorne as saying: "The most striking figure is that this $100 billion portfolio represents only 77 companies, but it accounts for 27% of the global market capitalization." He said that companies with a global market capitalization of less than $1 billion have More than 11,000 companies with a market capitalization in this group have fallen by nearly 10% this year; companies with a global market capitalization of less than $500 million have fallen by about 5% this year.

He pointed out that this phenomenon highlights the problem that the market is increasingly focusing on some large-cap stocks, which represent only a small part of the global company, but give investors a bright "mistaken impression", the facts "Enterprises are struggling."

According to the report, the phenomenon that such large-cap stocks perform better than small-cap stocks also occurs in the US stock market at the moment, but it is more pronounced in global stock markets. Jeffries stock strategist Steven De Sanctis wrote in a research report released on July 3 that over the past year, US small-cap stocks have outperformed 13% of the larger stocks because of smaller companies in the economy. Under the environment of slowing down growth, it is more difficult to resist the pressure of profits caused by labor and rising cost of raw materials.

However, in spite of this, the US small-cap stocks are still generally rising.

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Iris Liang
SEKO Machinery & Technology Co., Ltd
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