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Economic Sector

Last updated: Wednesday, November 22, 2017

 

Market Capitalisation of 100 Most Valuable Companies Sets New Record

Posted: Monday, July 10, 2017

The US extended its leading position with 55 companies this year, up from 54 last year. The US share by market capitalisation increased slightly to 63 per cent (an increase of US$1,292 billion). All companies in the Top 10 are US companies.

The market capitalisation of the 100 largest companies globally increased significantly by US$1,861 billion or 12 per cent compared to 31 March 2016, according to the Global Top 100 ranking recently released by PricewaterhouseCoopers (PwC). This increase more than reversed the dip in 2016 and is the highest value on record.

Nearly 70 per cent of the growth was contributed by the US companies, on the back of strong economic conditions pre and post US elections. Europe managed to arrest two years of value decline but its share continued to decrease proportionately.

For a third year now, the US accounts for more than half of the Top 100 (55 companies) and weighs in with 63 per cent of the overall market capitalisation. Apple was the strongest performer this year (in absolute terms), gaining US$149 billion or more than 25 per cent in value compared to 2016. This was closely followed by Amazon, which increased its market capitalisation by more than 50 per cent in 2017. Facebook, Bank of America and JPMorgan Chase have all powered the US growth.

Apple retains pole position for the 6th year in a row, and this year again clearly pulled ahead of the second ranked Alphabet, managing to double the valuation gap to US$175 billion from US$86 billion last year. Alphabet briefly dethroned Apple in February 2016. It is particularly remarkable as Apple also returned more cash to shareholders, with another US$29 billion handed back to investors in dividends and share repurchases in calendar year 2016 (US$42 billion was distributed in calendar 2015). Alphabet only returned US$4 billion in 2016.

Technology continued to be just ahead of the financial sector for a second year, underlining the lasting attractiveness of tech companies. The global top three remain technology companies: Apple, Alphabet, Microsoft, closely followed by Facebook in sixth position. These giants have an unequalled global reach and have changed our lives and the way we communicate and interact.

European companies have never fully recovered from the financial crisis and have seen spikes and troughs of volatility over the last decade. Europe now accounts for just 22 companies (down 9 compared to 2009 and down 19 compared to 2008), and only 17 per cent of the overall market capitalisation (down from 36 per cent in 2008). While Europe managed to arrest further decline, the value of its companies remains below 2013-2015 and 2010-2011 years.

China/Hong Kong total market capitalisation increased by 14 per cent compared to last year, with 11 companies in the Top 100 (unchanged from 2016) - as Chinese markets regained some confidence in 2016. Tencent was the top Chinese performer this year, having increased its value by 42 per cent to US$272 billion since 2016. Tencent and Alibaba are currently ranked at number 11 and 12, being on the brink of entering Global Top 10.

Clifford Tompsett, Head of IPO Centre at PwC, said, “The gap between the US largest companies and the rest of the world continues to widen. US companies are exploiting their global reach, financial strength and ability to innovate, - a sharp contrast to those in the UK and Europe, which continue to fall behind in the rankings. After a period of some stagnation, Chinese companies have performed well and two, Tencent and Alibaba, are poised to enter the Top 10 next year.”

H.T








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