China's Total Market Cap? Don't Ask!

Here's a fascinating little detail for all of those who insist on pointing to China as the cause of the meltdown earlier this week.

Consider this factoid: The combined value of China's Shanghai and Shenzhen stock markets - the total market capitalization - was $400 billion at the end of 2005; over the next 18 months, it nearly tripled, with especially strong gains over the last six months. After this week's 8.8% plunge, it is a mere $1.4 trillion dollars.

To put that into some context, the New York Stock Exchange has a global capitalization of ~$22.3 trillion. The Nasdaq is worth another $4.19 trillion dollars. Add in the Amex and figure the net total cap in the US is between $27 and 28 trillion dollars

Bottom line? By my back of the envelope calculations, our correction of 3.5% wiped out an estimated $1 trillion dollars in combined NYSE/Nasdaq 100 value -- more than two thirds of the entire capitalization of both of China's exchanged combined.

Hence, I doubt that China (alone) is responsible for what happened here . . .