The World's Market Capitalization is ShiftingEmphasis in major market capitalization is shifting away from established industrialized countries toward emerging markets.
US market dominance has dramatically declined. The present tendency in 
US to excess equity market valuation will accelerate movement of capital to more attractive emerging markets. Share valuations in Asia, often at 1 1/2 times book value, compare most favorably with characteristic multiples of 6 for similar companies on US market. Major US pension funds, e.g., CALPERS, are in high gear to diversify internationally by direct investment in emerging market growth companies.
It will be some time before confidence in Japanese capital market fully returns.
The less liquid European equity markets, compounded by economic Uncertainties, remain unattractive.
The move of investment capital will clearly be toward emerging economies of Asia, Eastern Europe, and Latin America.
World Economic Opportunities are Moving Too.
Prior to 1970, US represented half of world's Gross National Product (GNP). By 1995 it's share of world GNP had dropped to one third. Estimates are that by 2010 US share of world GNP will have dropped to one quarter.
The European economies are faced with an endemic problem of rapidly aging populations increasingly burdening their producers with taxes to cover escalating costs of state-funded retirement benefits as fewer wage earners have to pay for growing numbers of retired persons. The net effect inevitably is declining competitiveness in a world market increasingly dominated by lower cost producers in countries with abundant young labor resources. The current political swing in Europe toward more socialistically inclined governments can only exacerbate growing unemployment and declining productivity problems.
Any serious investor has to think in global terms!
Wise institutional and private investors are responding to these trends by diversifying their portfolios internationally.
Considering inherent investment risks in emerging markets where some degree of disorder is present, private investors without necessary research capacity to make sound investment decisions independently, take refuge in collective investment schemes, including partnerships, unit trusts, and funds.
