US firms cement their dominance in the top 500 league, Indian tally falls

The tally of emerging markets, barring China, have gone down, with the number of Indian companies in the top 500 list falling from 13 to 11 between 2008 and 2018

Despite the growing prominence of emerging markets (EMs) such as India on the world stage, the big-boy club of global markets continues to be dominated by US-based corporations. According to data, 203 of the world’s 500 biggest companies in terms of market capitalisation are from the US. A decade ago, there were only 164 US companies in the list.

On the other hand, the tally of EMs, which include India and South Korea, has fallen. For instance, the number of Indian companies in the top 500 list has fallen from 13 to 11 between 2008 and 2018 even as India dethroned three other markets to emerge as the eighth-largest in terms of market value during this period. Similarly, the number of companies from South Korea featuring in the list has fallen from six to three. China has been an outlier, with the number of Chinese firms in the list jumping from 25 in 2008 to the present-day 40, data showed.

This consolidation in the position of US-based companies in the top 500 list is mainly on the account of three factors – superior market returns, the rise of technology companies and a fall in the stature of the European markets.

The emergence of the new-age Silicon Valley companies is the major reason behind the increasing share of US-based companies in top league. The total number of technology companies in the top 500 list has gone up from 25 in 2008 to 55 now. This rise in the stature of technology firms came at the cost of energy, basic materials and communication sectors, which have witnessed sluggish growth.

The best example is the so-called ‘Faang´ stocks, which comprise the five giants --- Facebook, Amazon, Apple, Netflix and Google. These are the top-listed startups globally who weren’t in the race a decade ago. Today, the market cap of these companies is bigger than the gross domestic product (GDP) of several nations. These new entrants have overtaken some of the traditional stalwarts such as Exxon and General Motors.

Another reason behind the US dominance is that it has emerged as the preferred destination for listings of big startups, particularly from the technology sector.

For instance, China’s e-commerce giant Alibaba chose to list on the US bourses in 2014. The company is already a part of the top 500 list with an m-cap of $460 billion.

Also, US markets have seen a big bull run following the 2008 global financial crisis. The S&P500 index, a gauge for broader-market performance for US stocks, has rallied 93 per cent since 2008, outperforming most of the developed and EMs, including India. The Indian benchmark index Nifty has gone up 88 per cent during the decade.

On the other hand, most of the European equity markets have underperformed since the 2008 global recession. Broader economic slowdown, along with a lack of demand, has hurt the prospects of European companies in the top 500 list. The number of European companies in the list has come down from 120 to 86 in the last decade. This doesn’t come as a surprise given the market performance by several European nations. The UK’s market has given only 23 per cent returns in the last decade while the French and Swiss markets have remained flat. The only exception is the German market, which has given 82 per cent returns during the period but still underperforming the US markets.

US ALL THE WAY 

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Country	No. of companies in top 500		10-year-change in benchmark index (%)
	2008	2018
US	164	203	23.8
Germany	24	22	-8.3
France	26	25	-3.8
UK	33	26	-21.2
Japan	41	45	9.8
China	25	40	60
India	13	11	-15.4
South Korea	6	3	-50
South Africa	4	2	-50
Brazil	6	6	0