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The emerging equity gap: Growth and stability in the new investor landscape

Between the rising wealth of emerging market investors who keep most of their financial assets in banks and falling demand for stocks by many investors in developed economies, the role of listed equities in global capital markets could be reduced significantly. Decisive action by leaders in the financial industry, other businesses, and government can help eliminate an emerging "equity gap" to ensure that equity markets continue to provide capital for growth and the returns that investors need to meet their goals.

01/12/2011
Charles Roxburgh, Susan Lund, Richard Dobbs, James Manyika, Haihao Wu
McKinsey Global Institute
The emerging equity gap: Growth and stability in the new investor landscape

Several forces are converging to reshape global capital markets in the coming decade and reduce the role of listed equities. The most important of these is the rapid shift of wealth to emerging markets where private investors typically put less than 15 percent of their money into equities (compared to 30–40 percent in many mature economies). At the same time, demand for listed equities in developed economies is likely to fall due to aging, shifting pension regimes, growth of alternative investments, and new financial regulations.

 

The result will be a potential $12 trillion “equity gap” over the next decade between the amount of money that investors will wish to hold in equities and the amount that companies will need to fund growth. MGI projects that the share of global financial assets held in listed equities could fall from 28 percent to 22 percent by 2020 if these trends continue.

 

The report provides comprehensive new research and insights on the size, growth, and asset allocations of investor portfolios, and how these assets could evolve over the next decade.

 

Read the full report on MGI web site

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