The New York Times was good enough to run a list of the world’s 20 most valuable companies ranked by market cap in 1989, 1999, and 2007.
Japan owned the list in 1989. Most Americans would not even recognize the names. NTT (NTT) was on there. But, so were Mitsui Bank and Daichi Kangyo Bank. The Nikkei Index traded close to 39,000 then. It dropped to half of that by mid-1990. So much for their turn on the "world’s most valuable companies" list.
In 1999, most the list was taken over by tech companies. Microsoft (MSFT), Cisco (CSCO), and Intel (INTC) were among the top 10 companies. Oracle (ORCL), AOL, and IBM (IBM) were in the top 20. In early 2000, the Nasdaq traded above 5,100. A year later it dropped below 1,800.
Now, China is having its turn. A look at the top 20 companies by market cap today includes eight Chinese companies. PetroChina (PTR), China Mobile (CHL), and China Life (LFC) all have market caps over $200 billion. The US has only seven companies on the list. Most of the tech companies are gone.
PetroChina has a market cap of $429 billion. Last year, it had revenue of $88 billion. Exxon’s (XOM) market cap is $525 billion. Last year, its revenue was $378 billion. Similar comparisons can be made between Chinese and US financial, energy, and telecom companies that have $200 billion plus market caps.
A slowdown in the world economy will have particularly acute effects in China. Its massive export machine will be undercut by falling demand. Markets will slow there. Energy costs will rise. Share prices will fall ,and, they could collapse.
Then, it will be someone else’s turn on the list.
Douglas A. McIntyre