While the media focuses on a single story or a few major themes in financial markets at a given time, it is important to focus on the larger picture of where the largest stocks of financial assets are and where are the greatest cross border flows. The insightful graph from McKinsey & Co provides a good depiction of the world financial picture.
The importance of Europe cannot be underestimated. Nevertheless, it is important to focus on the margin. In this case, the accumulation of wealth in Asia, particularly China is the region of greatest change albeit off a low base. The growth of these new areas of financial wealth is one of the reasons why the comment from some economists that we should describe India and China as “Chindia” make sense.
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