Globalization is a phenomenon known to all, which can be defined as follows: a phenomenon of the opening up of national economies to a world market, leading to growing interdependence between countries. The impact of globalization is probably most pronounced in financial markets. Buying shares of companies listed in different countries has never been easier and cheaper for traders across the globe, whether professional or amateur. From the 1990s to the global financial crisis of 2008, the correlation between the international stock market and the US stock market steadily increased, albeit at a moderate pace. However, since the subprime crisis, this correlation has remained more or less stable. This may reflect the fact that globalization has reached some sort of peak, but it seems unlikely, especially as African and Asian countries are undeniably increasingly integrated into the global economy. It is quite possible that the relatively weak correlations observed are in fact only caused by time lags due to different time zones. Using data corrected to show the same time zone, we can indeed see that the correlation is much higher and the stock markets are trading synchronously. The world is increasingly a village and we just need the right data to prove it. It is nonetheless true that the correlation will never be perfect and that some markets are more attractive than others thanks to their own characteristics.
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