Global financial markets are witnessing continuous changes and increasing challenges, especially with the rise in global debt and the impact of monetary and fiscal policies on the economy.
In this context, Bank of America (BoA) has presented a comprehensive report reviewing the size of financial markets and the most prominent challenges associated with them. This report answers a set of key questions related to global financial markets that were mentioned in a report recently published by the Financial Times.
Global Financial Markets and Their Associated Challenges
- How big are the global financial markets now?
According to a Bank of America (BoA) report, the total value of global stocks and bonds reached $255 trillion in July 2024. According to the Financial Times, this is the highest level ever for market value, reflecting a significant increase from its lowest level in 2008 when the value was $104 trillion.
- Are bond markets bigger than stock markets?
Yes, bond markets are larger than stock markets, but the gap between them has narrowed since 2008. While the value of global bonds has doubled, the value of global stocks has quadrupled.
- How big is the global debt?
According to Bank of America, total global debt has reached $313 trillion, which is equivalent to 3 times the world’s GDP.
- How big is government debt compared to other debts?
Most of the global bond market consists of government bonds, with US Treasuries still dominating. In 2008, they represented 28% of the global bond market, but now they represent 44%.
- How does the focus on fiscal policy affect the global economy?
The Bank of America report pointed to a major shift from monetary policy to fiscal policy. The increasing reliance on government borrowing has led to a significant increase in government debt, reshaping the global financial system.
- How big are emerging market stock markets compared to global markets?
Emerging markets currently account for one-fifth of the total value of global stocks, a relatively small share compared to the size of the global economy.
- How does investor behavior affect global financial markets?
The report showed an unusual focus on growth stocks, especially in the United States, raising concerns about the overvaluation of U.S. stocks, which have reached record levels compared to U.S. government bonds and commercial bonds.
