Index Insights
What Happened to European Equities?
The UK and the Rest of Europe Have Lost Share of Global Equities Markets. Is a Rebound Possible?
European representation within the global equities’ universe has declined significantly, according to new research from Morningstar Indexes.
In the new report, authored by Morningstar Indexes Strategist Dan Lefkovitz and coinciding with the twentieth anniversary of Morningstar Indexes, Europe went from a 26% weight within the Morningstar Global Markets Index in 2011 to a 17.1% weight in 2021. The UK saw the largest decline and now represents less than 4% of global equity markets. The world’s 10 largest public companies at the end of 2021 were all-American. Nestle, the largest European company, was #16.
This significant shift in global equity market representation is a result of the remarkable expansion in the share of US equities, the rise of China, as well as factors unique to the UK and Europe.
Dan Lefkovitz – Strategist, Morningstar Indexes:
“Europe, and the UK in particular, have been left behind in recent years amidst a technology-fueled bull market led by the US and China. Not only has Brexit been a setback, but European markets have been characterized by lack of dynamism—they’re dependent on traditional sectors like consumer defensive, financials, energy and basic materials. But valuations and shifting market leadership could mean brighter days are ahead.”
The Morningstar Global Markets Index is designed to represent the investable universe for global equity investors. As of December 2021, the Index includes 8,510 securities from 49 developed and emerging markets. Morningstar Indexes, founded in 2002, were built to keep up with the evolving needs of investors—and to be a leading-edge advocate for them. Our rich heritage as a transparent, investor-focused leader in data and research uniquely equips us to support individuals, institutions, wealth managers and advisors in navigating investment opportunities across all major asset classes, styles and strategies. From assessing risk and return with traditional benchmarks to helping investors effectively incorporate ESG objectives into their investment process, our range of index solutions spans an investment landscape as diverse as investors themselves.
To speak with Dan Lefkovitz, reach out to Tim Benedict at tim.benedict@morningstar.com or (203) 339-1912.
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