The improving economy in the U.S. has helped American companies overtake Chinese firms on the list of the world’s 500 biggest stocks at the fastest pace we have seen in a decade.
Out of the world’s 500 biggest stocks, American companies account for 171. Led by Apple (AAPL) and Exxon Mobile (XOM), American companies on the list have a market cap of $10.6 trillion, or around 40.3 percent of the total. That is up from 159 companies with $8.29 trillion in market cap just three years ago.
Meanwhile, Chinese companies on the list fell from 34 to 24 and their market cap shrank from $2.19 trillion to $1.74 trillion.
The biggest reason American companies are growing faster than Chinese companies, despite a shrinking economy, is that investors have more faith in the free market. In China, there is no guarantee that the government will not step in and take property away from Chinese companies, so investors are a little weary of putting too much money to work in China based companies.
While there is no doubt that the Chinese economy has been in better shape that the U.S.’s in recent years, the American market is still where investors turn because of its safety, and that is not likely to change. China is still growing a lot faster than the U.S. No, it is not still growing at 10% a year, but even at 7% or 8%, it is a very attractive economy, but as long as investors continue to worry about government intervention Chinese stocks will continue to suffer.
Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va. His articles typically cover big-picture events and forecasting what impact they will have on the stock market. In addition to writing for Fresh Brewed Media, Michael also wrote for AOL's BloggingStocks for three years, focusing most of his attention on the energy and technology sectors.