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Based on financial publications Fisher Investments UK reviews, many tend to see a given nation’s importance to global returns in the context of its economic size. Sounds intuitive. Surely a big piece of the global economy would logically be a big piece of global markets. But in our view, reality is more complex, and investors can benefit from taking a more nuanced approach when searching for opportunities.

To rank nations’ economic influence, we are using gross domestic product (GDP), a government-produced measure of economic output. Whilst GDP isn’t the only measure of output, it is widely used in economic commentary Fisher Investments UK reviews. According to the World Bank, as of 2023 (the latest data available), the United States has the largest GDP at $27.7 trillion.[i]  China is second at $17.8 trillion, followed by Germany ($4.5 trillion), Japan ($4.2 trillion) and India ($3.6 trillion).[ii] As a collective, the European Union ($18.6 trillion) would rank second.[iii] Again, these are 2023 figures – several nations have already reported 2024 results, but for consistency and global comparison, we are looking at the most recent complete worldwide dataset.

And perhaps counterintuitively, GDP sizes aren’t proportional to countries’ share of global equity markets. Consider the MSCI All Country World Index (ACWI), which combines MSCI’s World and Emerging Markets indexes. The MSCI ACWI has a market capitalisation of $81.5 trillion, and America comprises about $52 trillion (64%) of it – much larger than its 26% share of global GDP.[iv] In comparison, China’s slice of global GDP is about 17%, nearly six times greater than its 3% MSCI ACWI weighting.[v] To further illustrate the disconnect, India’s GDP ($3.6 trillion) eclipses Switzerland’s ($885 billion), yet the latter’s MSCI ACWI weight (2.2%) exceeds the former’s (1.9%).[vi]

Why is this? In Fisher Investments UK’s review, it’s because the equity market isn’t the economy. Equities are slices of ownership in publicly traded companies and their future earnings. GDP is much broader and represents the flow of all economic activity – goods and services bought and sold as well as public and private investments – by summing up a country’s private consumption, gross investment (household, business and government), government spending and net exports (exports minus imports).

This is one way to track economic output, but it is imperfect, in Fisher Investments UK’s opinion (as we think all measures are). For example, GDP counts imports as a negative, but they represent domestic demand and don’t detract from the economy, in our view. Many companies rely on imports (e.g., raw materials or components) to create their final end-product, and some retailers’ business model revolves around selling imported goods. Also, less economically developed countries may have a high GDP due in part to large population size. But the number of people in a country doesn’t dictate the number of public companies will be present or those companies’ size and global reach.

Now, equities may reflect some of what GDP measures. For example, a contracting GDP may indicate broad economic weakness, which could weigh on corporate earnings. But other factors beyond the economic environment influence companies’ profitability. For instance, regulations and/or legislation (think new compliance responsibilities or a tax change) can increase companies’ costs and affect investment decisions.

We think investors can benefit from incorporating this knowledge into their decision-making. For example, financial publications Fisher Investments UK reviews often tout a country’s investment prospects due in part to its economic development. But a nation with promising economic potential doesn’t necessarily have a broad or diverse equity market. For example, Brazil is the largest economy in a developing part of the world, but just four sectors (Financials, Energy, Materials and Utilities) make up close to 80% of its equity market – indicating limited opportunities, in our view.[vii]

Disconnects between countries’ economic and market sizes can also help remind investors that troubles in a country with a large economy don’t necessarily have a large effect on global returns. This has been the case for China, which has a history of local bear markets (typically fundamentally driven equity market declines exceeding -20%) amidst global bull markets (a long period of generally rising equity prices). For example, during the 2009 – 2020 global bull market, Chinese equities experienced two bear markets, according to our research.[viii] But because China is such a small share of the global market – and because, according to Fisher Investments UK’s reviews of market conditions, the factors affecting its market were predominantly local – its decline didn’t take down broader global markets.

So yes, in Fisher Investments UK’s view, GDP is important. Scaling countries’ contributions to global growth can help investors assess global conditions, which we think matter to corporate earnings. But when it comes to assessing equity market opportunities, we don’t think looking at GDP alone gets you far.

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This document constitutes the general views of Fisher Investments UK and should not be regarded as personalised investment or tax advice or a reflection of client performance. No assurances are made that Fisher Investments UK will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. Nothing herein is intended to be a recommendation or forecast of market conditions. Rather, it is intended to illustrate a point. Current and future markets may differ significantly from those illustrated here. In addition, no assurances are made regarding the accuracy of any assumptions made in any illustrations herein. Fisher Investments Europe Limited, trading as Fisher Investments UK, is authorised and regulated by the UK Financial Conduct Authority (FCA Number 191609) and is registered in England (Company Number 3850593). Fisher Investments Europe Limited has its registered office at: Level 18, One Canada Square, Canary Wharf, London, E14 5AX, United Kingdom. Investment management services are provided by Fisher Investments UK’s parent company, Fisher Asset Management, LLC, trading as Fisher Investments, which is established in the US and regulated by the US Securities and Exchange Commission.

Investment management services are provided by Fisher Investments UK’s parent company, Fisher Asset Management, LLC, trading as Fisher Investments, which is established in the US and regulated by the US Securities and Exchange Commission. Investing in financial markets involves the risk of loss and there is no guarantee that all or any capital invested will be repaid. Past performance neither guarantees nor reliably indicates future performance. The value of investments and the income from them will fluctuate with world financial markets and international currency exchange rates.
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[i] Source: The World Bank, as of 12/6/2025. Statement based on GDP in nominal (not inflation adjusted) dollars.

[ii] Ibid.

[iii] Ibid.

[iv] Source: The World Bank and FactSet, as of 16/6/2025. Statement based on MSCI ACWI market capitalisation and member nation weights as of 16/6/2025. Market capitalisation (share price multiplied by the amount of shares outstanding) is a measure of an index or equities’ total outstanding market value.

[v] Ibid.

[vi] Ibid.

[vii] See note iv. MSCI Brazil sector weightings as of 16/6/2025.

[viii] Source: FactSet, as of 17/6/2025. MSCI World Index and MSCI China Index returns with net dividends, 31/12/2008 – 31/12/2019