Bloomberg News

LONDON - The value of the world's publicly traded companies surged by nearly one-third in 1999, exceeding the world's output of goods and services for the first time.

At the end of November the market value of stocks around the world reached $34.6 trillion, 32% higher than a year earlier, according to the International Federation of Stock Exchanges. That sum exceeds the $30.1 trillion that the International Monetary Fund estimates as the value of world output this year.

Stocks have surged as investors abandoned usual methods of evaluating companies and bought stocks just to keep pace with the market.

"If you've been thinking logically and looking at valuations, you've missed out," said Michael Krinner, a fund manager at Bank fur Handel und Effekten in Zurich, who said his portfolio, benchmarked to the Standard & Poor's 500 index, has lagged the 80% gain posted by the Nasdaq composite index this year. "This may be a new era, and you have to accept it."

Since the end of October 1998, when markets began to recover from a slump that was prompted by Russian loan defaults, the value of all listed companies worth more than $100 million has risen by $12 trillion as of the close of trading Wednesday, according to Paul Horne, European equity economist at the Salomon Smith Barney unit of Citigroup Inc.

That's equal to gains of about $857 billion a month, $28 billion a day, $1.2 billion an hour, or $330,000 for every second that has elapsed since the end of October 1998.

"The psychological impact of this probably unprecedented increase in global equity wealth, relative to other financial and physical assets, was undoubtedly positive, boosting consumer and business confidence," Mr. Horne said.

The ratio of stock valuation to world output has been growing for several years. At the end of 1989 the ratio was 42%; at the end of 1997 it was 64%.

The United States accounted for about half of the $12 trillion growth in valuation since the end of October 1998, a sum that equals about two-thirds of 1999 U.S. gross domestic product unadjusted for inflation.

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