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Paybacks of Solving World Problems By Giant Leaps & Not Baby Steps

Don’t let mediocrity talk you out of your dreams; ‘cause lions have little in common with sheep. During the pandemics, while the sheep’s bleated, the lions roared.

The Global Top 100 companies by market capitalization performed strongly from March to December 2019 and still outperformed industry peers amid market volatility caused by COVID-19 in Q1 2020. After that in Q2 2020, they have shown remarkable recovery.

 For believers, the passage from the second to the third millennium was not merely a stage in the relentless march of time, but a significant occasion to become more aware of God’s plan unfolding in the history of humanity. And history is not written backwards but by actions being taken forward. At WEF we have 39 future councils evolving and progressing the future of humanity.  

In 3 months, RIL while working hard to progress humanity gained 90 Bn in market capitalization and  jumped 50 ranks into the top 50 most valued companies globally ranked 48th in market cap globally. The company has a combined m-cap of Rs 14.14 lakh crore or over USD 189 billion, well set to ride into the Trillion Dollar m-cap club. While doing so, RIL toppled ExxonMobil ( 183 Bn ) to become the 2nd largest Energy Company in the world. No Indian company has ever crossed an m-cap of Rs 14 lakh crore. This is higher than Chevron’s about USD 170 billion m-cap as well as likes of Oracle, Unilever, Bank of China, BHP Group, Royal Dutch Shell and SoftBank Group. Globally, Saudi Aramco is the company with the highest market cap of USD 1.7 trillion, followed by Apple, Microsoft, Amazon, and Alphabet. 

Every company that is fighting the pandemic has created value for the society and soared in market value.

So while the pandemic scared the sheep, it could not deter the lions. Because the history of humanity unfolding as future is owned by the lions who, imagine, design and implement it.

We call such “LION APPROACHES as resilient and sustainable corporate governance where risk mitigation is based on principles of -  

  1. NimbleNess.
  2. Adaptability.
  3. Finding opportunity in adversity.
  4. Looking into the future quicker.
  5. Never giving up.

The sheep will call this opportunism. But its only by examples of lion like courage to solve world problems that humanity has seen its history emerge in the future.  

Corporations are the skeleton of a society and those cannot be allowed to crumble. These Lion Corporations are the institutions that are “Built To Last”.

Do you have Pandemics Risk Management included in your risk mitigation strategies at the Board Level ?

Spread Awareness To Reboot the World Faster. 

Companies that adopt “LION APPROACHES” to solve Global Problems figure in thetop 100 companies ( By market cap ) whose total market capitalization is 25 Trillion USD. Given the significant volatility in financial markets, these world’s largest companies provide relative security for investors. The concentration of Technology and Consumer Services companies is a key driver of the Global Top 100 outperforming the wider market index. This is a challenging environment for all companies, but there are clear distinctions in the relative performance of different regions and sectors. We analyse interesting insights into how markets are viewing world’s largest businesses as they adapt to this uncertain landscape.

US$25.0Tn — market capitalisation of the Global Top 100 companies (June 2020) — up 17% from March 2020

21%increase — in the market capitalisation of US companies in the current Global Top 100 (from March 2020)

87 companies — in the current Global Top 100 saw an increase in market capitalisation from March to June 2020

Global equity markets have seen a strong bounce back from the low points seen in March 2020, but volatility remains elevated anda disappointing reporting season for H1 2020 earnings could cause a re-evaluation of recession risks and associated stock valuations.

As at 30 June 2020, the MSCI World Index (representing large and mid-cap equity performance across 23 developed markets) was 7% behind 31 December 2019, having recovered most of the ground lost in the first quarter of 2020.

Having decreased by 15% ($3,905bn) from December 2019 to March 2020, the market capitalisation of the Global Top 100 as at June 2020 was 1% ($335bn) behind December 2019. In general, the world’s current largest companies have seen a stronger market capitalisation recovery thanthe wider market indices, reflecting the relative concentration of the Technology and Consumer Services sectors in the Global Top 100.Consumer Services companies, including Amazon, Pinduoduo and Meituan Dianping significantly outperforming the industry index.

 

 

 

The Inflection Point

31 March 2020 fell in the midst of an upheaval in the global equity markets caused by the COVID-19 pandemic. Volatility levels had increased significantly, and investors were highly sensitive to short-term news-flow.

Given the uncertain outlook for the markets, as the world adapted to the changing environment caused by the COVID-19 pandemic, investors were favouring the relative security of the larger companies and that they were discriminating keenly when assessing the prospects for different sectors.

“Given the significant volatility in financial markets, the world’s largest companies provide relative security for investors. The concentration of Technology and Consumer Services companies is a key driver of the Global Top 100 outperforming the wider market index. This is a challenging environment for all companies, but there are clear distinctions in the relative performance of different regions and sectors. I hope this quarterly review will provide interesting insights into how the markets are viewing the world’s largest businesses as they adapt to this uncertain landscape.”

Global Top 100 companies by region

Global Market capitalisation

  • Having decreased by 15% ($3,905bn) from December 2019 to March 2020, the market capitalisation of the Global Top 100 as at June 2020 was 1% ($335bn) lower than December 2019.
  • In general, the world’s current largest companies have seen a stronger recovery in market capitalisation than the wider market indices, reflecting the relative concentration of the Technology and and Consumer Services sectors in the Global Top 100. Consumer Services companies, in particular, significantly outperformed the industry index.
  • Saudi Aramco maintained its leading position, but suffered from the prevailing oil price outlook. The second and third ranking companies, Apple and Microsoft saw market capitalisation increases of $469bn (42%) and $344bn (29%) respectively from March to June, closing the gap with Saudi Aramco.

Sector performance of the Global Top 100 companies

  • Industrials and Basic Materials: In these historically cyclical sectors, institutional investors’ focus appears to have shifted towards value and defensive stocks, supported by strong fundamentals.
  • Consumer Services and Technology: The market capitalisation of these sectors recovered from the first-quarter losses as both benefited from changing consumer trends in response to COVID-19.
  • Financials and Oil & Gas: Companies in these sectors saw modest gains of 5% and 10% respectively in March to June 2020, recovering some lost ground from the first quarter.

Australia :

Canada :

China :

Denmark :

France :

Germany :

Hong Kong : 

India :

Ireland : 

Japan : 

Netherlands :

Saudi Arabia : 

South Korea : 

Switzerland :

Taiwan :

United Kingdom :

United States :

  

Regions

Global Top 100 companies from US and China and its regions recovered first-quarter losses in March to June 2020. Europe andRoW did Region not recover the lost ground.

US technology companies contributed to a 21% market capitalisation increase for US companies from March to June2020. China and its regions*

The performance in China and its regions since December 2019 benefitted from a combination of being further advanced in recovering from the effects of COVID-19 and a strong Technology and e-commerce (Consumer Services) component.

Regional perspectives

All regions experienced an increase in market capitalisation of the companies included in the Global Top 100 until December 2019, after which gains were wiped out in every country (excluding Saudi Arabia).

European companies in the Global Top 100 experienced the most significant reduction in relative terms in the three months to March 2020, with market capitalisation decreasing by 25% ($956bn).

UK companies in the Global Top 100, with a relatively high Oil & Gas sector weighting, gained a moderate 2% in March to December 2019, before seeing a 28% reduction in market capitalisation to March 2020.

The US continues to dominate the Global Top 100 in terms of number of companies in the list and market capitalisation, albeit with a $2,204bn (14%) reduction from December 2019-March 2020.

China and its regions, the second largest contributor to the Global Top 100 with 14 companies, lost one company in the year, widening the gap with the US.

 

Sectors

  • Global Top 100 companies in the historically cyclical Industrials and Basic Materials sectors saw the largest gains from March to June. Institutional investor focus appears to have shifted towards value and defensive stocks, supported by strong fundamentals.
  • The market capitalisation of Consumer Services and Technology companies in the Global Top 100 recovered from the first-quarter losses, with both sectors seen as benefiting from digital acceleration in a post COVID-19 world. The expectation is that the momentum for online retailers and migration to the cloud in general will continue to grow.
  • In contrast, certain sectors have been damaged by COVID-19, with potential long- lasting effects, such as the travel & leisure sector (Consumer Services), where past norms , including frequent business travel,may not return in the near term.
  • Global Top 100 companies in the Financials sector saw modest gains of 5%. The industry faces the challenge of a low interest rate environment coupled with significant expected credit losses.
  • The Oil & Gas sector saw a modest 10% increase in market capitalisation, as the sector faces continued challenges, including depressed commodity prices and the ongoing trend towards Environmental, social and corporate governance (ESG) investing.
  • NextEra Energy is the only Utilities company in the Global Top 100. Its market capitalisation decreased by 1% from March to June2020.

Comparison to index performance

• Global Top 100 companies in the Consumer Services, Industrials and Basic Materials sectors outperformed their respective industry indices in March to June 2020.

o All other sectors underperformed industry indices.

o Consumer Goods and Technology companies were in line with index performance.

Change in market capitalisation of June 2020 Global Top 100 

Companies

• Eighty-seven of the Global Top 100 companies as at June 2020 saw an increase in market capitalisation from March to June 2020, comparedwith just ten from January to March 2020.

• Ten companies included in the Global Top 100 as at March 2020 have dropped out and did not qualify for the June 2020list.

How different companies performed

Saudi Aramco joined the Global Top 100 this year in first place having undertaken the largest IPO in history in December 2019, and has retained this position since then.

Even with COVID-19 disruption, the market capitalisation of Microsoft and Apple each exceed $1tn as of March 2020. Amazon was valued at $971bn as of 31 March 2020 but has since exceeded the $1tn mark due to a surge in demand for online shopping created by movement restrictions put in place as a measure to contain COVID-19.

Only ten companies in the Global Top 100 saw an increase in market capitalisation from December 2019 to March 2020. These companies included:

  • Netflix moving from being a top ten faller from March to December 2019 (market capitalisation -9%) to the second biggest riser through to March 2020 (+16%)
  • Tesla which entered the Global Top 100 and was a top ten riser in both periods, with its market capitalisation doubling to $96bn

Top five

Saudi Aramco maintained its leading position, but suffered from the prevailing oil price outlook.

Apple and Microsoftsaw market capitalisation increases of $469bn (42%) and $344bn (29%), respectively, closing the gap with SaudiAramco.

Amazon became the fourth public company with a +$1tn market capitalisation as at June 2020. Alphabet was close, with market capitalisation of $966bn, which has since moved above the $1tn mark.

Returns to the Global Top 100

• Having dropped out of the March 2020 list, Boeing returned to the Global Top 100 with test flights for the 737 Max starting in June2020.

BHP and Softbank also returned to the Global Top 100, Softbank having raised $14.8bn from the sale of T-Mobile US shares in June 2020.

New entrants

• E-commerce platforms Pinduoduo, Meituan Dianping and Shopify entered the Global Top 100 for the first time, benefitting from the trends towards online shopping.

T-Mobile US acquired Sprint in April 2020, securing its place in the Global Top 100.

• Other new entrants include Qualcomm, Keyence Corporation and Lowe’s Companies.

Risers and fallers

• Six out of the top ten risers (in relative terms) from March to June 2020 were new entrants.

Pinduoduo saw the largest gains in relative terms (148%), with market capitalisation increasing by $62bn to $104bn in the three months to June 2020.

• Other notable top ten risersinclude:

o Tesla– Continuing the rally seen in the first quarter of 2020, market capitalisation increased by a further 104%($101bn).

o PayPal– The adoption of digital payments, further accelerated bythe pandemic, has benefitted PayPal. Market capitalisation was up 80% ($89bn).

o Reliance Industries — Market capitalisation increased by 58% ($54bn) as the company benefitted from a diversified portfolio and external investment in JioPlatforms.

o AbbVie– The company completed the acquisition of Allergan plc in May 2020, with market support reflected in a 51% ($57bn) increasein market capitalisation from March to June2020.

• Of the companies remaining in the Global Top 100, Wells Fargo saw the largest relative decrease in market capitalisation (11% / $12bn), consistent with the general sector sentiment. In late June 2020, the U.S. Federal Reserve announced it will cap bank dividend payments and bar share repurchases until at least the fourthquarter.

• Six out of the top ten fallers were in either the Oil & Gas or Financials sectors.

Complete Ranking

 

 

 

 


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