Sunday, 6 July 2008

Key trends in the Financial Times Global 500

As always the publication of the Financial Times Global 500 conveys a great deal of information about the world's most important publicly quoted companies - FT rankings are by stockmarket capitalisation.
However the presentation of the material by the FT does not bring out some of the most important trends as a comparison to 1996 is carried out in terms of individual countries. Reorganisation and aggregation of the data shows key trends more clearly.
The most striking trend is the sharp decline in the weight of US and Japanese companies.
In 1996 US companies accounted for 40.6 per cent of the total number of Global 500 companies, and by 2008 this had declined to 33.8 per cent. The decline of Japanese companies was even sharper from 22.0 per cent to 7.8 per cent. A smaller decline took place for the UK.
Unsurprisingly the largest gainers were BRIC (Brazil, Russia, India, China) companies. These rose from 3.2 per cent of the total in 1996 to 14.4 per cent in 2008.
But Eurozone based companies also advanced significantly from 13.4 per cent to 19.8 per cent of the companies in the same period.
The weight of the traditional bloc of US, Japanese and UK companies declined from 71.8 per cent of the total to 48.6 per cent.
These shifts are magnified by the decline in the value of the dollar, but that in turn partially reflects overvaluation of the dollar in the previous period.
At the level of national economies the shift in the balance of the world economy is well recognised - the majority of world GDP growth last year being in China, India and Russia, and in terms of dollar devaluation the Eurozone, in current exchange rates, became the world's largest economic unit following the decline of the dollar. But this new data also shows strikingly the shifts in terms of companies.

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