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Doha: The total value of the world’s largest 500 listed companies, measured by market capitalisation, increased by 13 percent in 2012 to $26 trillion, according to data compiled by the Financial Times. The increase has been principally driven by banks whose market capitalisation rose 29 percent to $4.2 trillion in 2012. As a result, banking is the most heavily represented sector in the FT Global 500, accounting for 16 percent of its capitalisation.
Bank stocks came under pressure during 2011 owing to concerns about their exposure to the European sovereign debt crisis and about the impact of new regulations and deleveraging, according to QNB Group.
A number of factors led to a strong recovery in bank share prices in 2012. These included the easing of tensions in the eurozone, despite the fact that fundamental challenges remain, relating to the region’s sovereign debt, weak economic growth and rising unemployment. Additionally, the outlook for the global economy became increasingly positive towards the end of the year. Notably, the US housing sector, which was a principal trigger of the 2008 financial crisis, has started to recover, improving the outlook for banks that were exposed to this sector.
As a result, it was the leading US and European banks that contributed most to growth in market capitalisation in 2012. The outlook for US banks benefited from the recovery in the US housing market and broader economy. The collective increase in market capitalisation for the seven US banks in the Global 500 was $195bn in 2012, 17 percent of the value of banks in the rankings.
In Europe, HSBC, Lloyds Banking Group and Unicredit were the strongest contributors to bank market capitalisation growth in 2012. These banks benefited from the easing of eurozone tensions. Tensions eased because the European Central Bank offered banks two rounds of unlimited collateralised loans at very low interest rates, backed sovereign debt in the region and the EU put in place strongly capitalised and permanent financial stability mechanisms. In addition, progress was made on an agreement to bring Europe-wide banking oversight under a single supervisor by 2014.
The 11 Chinese banks in the Global 500 at end-2012 accounted for 23 percent of the sector’s market capitalisation, ahead of the US banks’ 17 percent share. This included the world’s two largest banks by capitalisation: The Industrial & Commercial Bank of China, which grew by 4 percent to $236bn, and China Construction Bank, which grew by 14 percent to $200bn. Taken together, the 11 top Chinese banks’ market capitalisation grew by 11 percent to $962bn in 2012. They were boosted towards the end of the year by strong government support, a new leadership that has emphasised domestic investment and consumption and positive economic data.
Oil & Gas producers, the second largest sector, saw market capitalisation falling by 2 percent in 2012, despite small increases in global oil prices and production. Brent oil prices were 0.4 percent higher on average in 2012 at $111.8 per barrel. Total global oil production was 2.7m barrels per day (b/d) higher at 90.8m b/d, on average, in the first three quarters of 2012 versus the same period in 2011. However, most of the increase in production was from Opec (1.8m b/d), which is largely controlled by unlisted state-owned producers.
As a result, investors were broadly neutral on publicly listed oil producers during 2012. If major national oil companies were listed, their market capitalisation would probably be considerably larger than ExxonMobil’s ($395bn). ExxonMobil is the largest listed oil and gas company with a total hydrocarbon resource base of 87bn barrels of oil equivalent (boe).
The Global 500 Pharmaceutical & Biotechnology sector performed well in 2012 with market capitalisation rising 11 percent to $1.8 trillion. Investor concerns about the expiry of a number of major patents were alleviated in 2012 and sales demonstrated strong growth in emerging markets. Johnson & Johnson of the US remained the largest listed company in this segment with a market capitalisation of US$194bn. The strongest contributors to growth in the sector were Sanofi of France and Roche of Switzerland. Concerns about patent expiries had been particularly acute at these companies, but now appear to have been alleviated.
The largest Global 500 company is Apple, with market capitalisation growth of 33 percent to $501bn during 2012. Samsung Electronics posted market capitalisation growth of 53 percent to $228bn in 2012. Both these companies were boosted by strong sales of their top-end mobile handsets. This drove a 14 percent increase in market capitalisation of the Technology & Hardware Equipment sector to $1.4 trillion.
Software and Computer Services grew 17 percent to $1.1 trillion market capitalisation in 2012. US companies dominate this sector with household names such as Microsoft ($225bn market capitalisation), IBM ($216bn), Google ($187bn) and Oracle ($157bn).
The Facebook initial public offering boosted this sector’s representation in the Global 500 as it achieved a market capitalisation of $29bn at end-2012. SAP, the German software-solutions company, was the largest contributor to growth in this sector with market capitalisation rising 51 percent to $98bn as businesses continued to invest in software to improve operating efficiencies. In particular, revenue was boosted by a key database platform that allows customers to process large quantities of data at rapid speeds.
Five companies from the GCC made it into the Global 500 for 2012. This included two Qatari companies — QNB Group with a market capitalisation of $25bn and a ranking of 356th and Industries Qatar ($23bn, ranked 384th). The other GCC companies were SABIC and Al Rajhi Bank of Saudi Arabia and the UAE based telecommunications company Etisalat.