Chinese Companies Drive Decrease in Market Capitalization of Global Top 100 Companies

The market capitalization of the 100 largest companies globally decreased significantly for the first time since post-crisis levels, down 4% compared to 31 March 2015, according to PwC’s Global Top 100 ranking. The main drivers of the decrease were Chinese companies, which were heavily affected by market conditions in China over the year, and Europe, which struggled with economic growth this year.

The original analysis for the Global Top 100 and the figures in this ranking cover the period from 31 March 2015 to 31 March 2016. However, further top-line analysis of the Top 100 since the recent result of the UK’s EU referendum vote shows very little change with only a slight downward movement in the overall market capitalization, and some minor changes in the constituents of the Top 100 at the bottom of the table.  In particular, the UK retains the third position with seven UK companies in the Top 100, despite a small decrease in some valuations.

US extends leading position

The decrease was partially offset with an increase of US representation, by $314bn. The US now accounts for more than half of the Top 100 (54 companies) and weighs in with 62% of the overall market capitalization. The strong performance of Alphabet (ex-Google), Amazon, and Microsoft, along with Kraft-Heinz, the consolidated entity following acquisition, entering the Top 100 this year, have all fuelled US growth.

Apple retains pole position for the 5th year in a row, but a $121bn (17%) decrease in market cap sees the gap with second ranked Alphabet narrow from $350bn last year to just $86bn.  Alphabet briefly dethroned Apple in February 2016.

Technology has overtaken the financial sector this year, underlining the resilience and innovative features of tech companies. The global top three are now technology companies: Apple, Alphabet and Microsoft, closely followed by Facebook in sixth position. These giants have an unequalled global reach and footprint and have contributed to reshaping a digital way of life on a global scale.

European companies were badly hit by the financial crisis but have also been much slower to emerge than the US.  Europe now accounts for just 24 companies (down 7 compared to 2009 and down 17 compared to 2008), and only 19% of the overall market capitalization.

China/Hong Kong total market capitalization decreased by 20% compared to last year - though all 11 companies survived - as market values were strongly impacted by the weak performance of Chinese markets.

“The US has extended its leading position by using their global reach, financial strength and ability to innovate to their advantage," says Clifford Tompsett, Head of IPO Centre at PwC. "We can also see that bigger companies have proven more resilient than average, with the exception of some natural resources companies, as despite uncertain market conditions and growth perspectives, 91 companies from 2015 remained on the list as of at 31 March 2016 – a stable level compared to previous years.”

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