Tuesday, January 17, 2012

Global market capitalisation, 2011

It was a surprise to hear that Apple had overtaken Microsoft in May 2010 for market capitalisation (that's the total market worth, from the number of shares times the share price).  On the other hand, although such a figure represents the money shareholders could get for selling their shares, it is not realistic.  For one thing, as soon as a perceptible proportion of shares get sold, the price falls and that "market" worth is demonstrably not intrinsic.  And that measure also embodies public sentiment of the company, and in that respect alone, Apple is at an all-time high.

Call me sentimental, but I still like that measure of a company's "value".  The latest collation by the Financial Times is third quarter last year, and it reads as follows (they're all into the hundreds of billions):

1.  Apple (US, tech)
2.  Exxon Mobil (US, oil)
3.  PetroChina (China, oil)
4.  IBM (US, tech)
5.  Microsoft (US, tech)
6.  Industrial/Commercial Bank China (China, bank)
7. China Mobile (China, tech)
8.  Shell (Dutch, oil)
9.  Nestle (Swiss, food)
10. Chevron (US, oil)

Some of my characterisations are simplifications of course, because the larger corporations generally have fingers in several pies.  But on the above basis, four of the top ten are tech and four are oil.  The Chinese ones are said to be state-owned, which would mean that a portion of their shares trade, and the total value is based on what it would be if all were tradeable.  Microsoft was once top, and it's a surprise, given their global ubiquity, that they're now only number three technology.  It's also sobering to think how much capital is at stake in gross carbon emission.

Other useful measures are nett assets, revenue, and nett income.  On the basis of revenue, WalMart's at the top, which may not be surprising if you think of them as a grocer or trader, but retail margins can't be that high, so revenue alone - despite being much-discussed - is, I think, overrated as an indicator.

Yet these indicators are useful for different reasons, different perspectives on the global economy.  Wouldn't you think nett profit or nett assets would be more meaningful than the others?  The downside of the asset measure is that some of the large financial organisations own bulk assets, but liabilities are great too, as they're effectively holding the assets for others.  Meanwhile, however, the control of assets per se can be meaningful.  Surprisingly, nett assets doesn't seem to rate a high mention.

Apple's 2011 profits were the largest, at $25 billion, although Exxon has been making much larger profits for much of the last decade.

All info here has been sourced via Wikipedia, from Forbes and the Financial Times.

No comments: