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Your retirement savings are increasingly tied to the fortunes of big tech

Unfortunately, diversification isn’t what it used to be

The US now accounts for 65% of global stock market capitalisation, a record high. Photograph: Sebastien Bozon/AFP via Getty
The US now accounts for 65% of global stock market capitalisation, a record high. Photograph: Sebastien Bozon/AFP via Getty
Proinsias O'Mahony's picture
Proinsias O'Mahony
Sat Aug 24 2024 - 06:15

Think you’re not overly exposed to today’s mega-cap technology stocks?

Think again. Bank of America strategist Michael Hartnett’s latest Hitchhiker’s Guide to the Investment Universe may surprise pension fund investors unaware of how much of their retirement savings are tied to a few tech giants.

He notes that the US now accounts for 65 per cent of global stock market capitalisation, a record high. At a combined 20 per cent, Europe and Japan’s share of the global market has almost halved since 2008 (39 per cent).

Indeed, the market value of the US tech sector is larger than the combined value of Europe and Japan’s stock markets. Just seven US stocks account for more than a third of the entire US market. Globally, the top 10 stocks now account for a quarter of global stock market capitalisation, up “dramatically” from 10 per cent in March 2009.

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Diversification isn’t what it used to be. The market seems smaller than ever before.

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