RIL, HUL, ITC: Top 50 APAC firms lose over $185 billion in m-cap in Q3

Top 50 firms in the Asia-Pacific (APAC) region lost a cumulative $185 billion in market capitalisation (m-cap) in the September 2023 quarter (Q2-FY24 / Q3-CY23), suggests a recent report by GlobalData, a London-based analytics and consulting company.

The sharp drop on a quarter-on-quarter (Q0Q) basis, the report said, was triggered by a weak Chinese economy punctuated by deflationary trends during the quarter and a squeeze on the region’s exports due to uncertain global economic conditions.

"In the third quarter, 27 of the top 50 companies witnessed a QoQ decline in their m-cap from $4 trillion to $3.7 trillion. Factors such as China's descent into deflation, a sluggish domestic property market, and weakening external demand had a negative impact on both household and business confidence. The APAC region is likely to remain burdened by weak global demand, expensive funding, persistent or uncontrolled inflation and rising crude oil prices in the foreseeable future," said Murthy Grandhi, business fundamentals analyst at GlobalData.

Companies from the financial services and technology sectors topped the list with an aggregate market valuation of $1.9 trillion and $2.2 trillion, respectively. Out of the top 50 companies, 16 belong to the financial services sector while 13 belong to the technology sector. Geographically, 23 companies are from China, followed by 10 from Japan and nine from India.

Among the lot, CNOOC Ltd and HDFC Bank witnessed the highest quarter-on-quarter (QoQ) growth of over 20 per cent, whereas AIA Group and Keyence Corp saw their m-cap erode by over 15 per cent.

HDFC Bank saw its m-cap surge by 20.3 per cent to hit $139.4 billion, propelled by the robust growth of 15.7 per cent in total advances and 19.2 per cent in deposits. This impressive performance, GlobalData report said, was further fueled by the positive results across all segments, a diversified fee income mix, and strong asset quality throughout the various segments.

Reliance Industries (8 per cent), Hindustan Unilever (7.9 per cent) and ITC (1.3 per cent) were the Indian companies that saw a drop in m-cap during the recently concluded quarter. On the other hand, TCS, Infosys, Bharti Airtel, State Bank of India and ICICI Bank were among the Indian counters that added to their m-cap in the September quarter, the GlobalData report said.

For Infosys and TCS, quarterly results were the key catalysts that brought back these stocks on investor's radar. However, their stocks remained volatile due to lower growth forecasts. On the other hand, RIL that witnessed an 8 per cent dip in its m-cap is attributed to stock consolidating following the Jio Financial demerger, GlobalData report said.

Hindustan Unilever, meanwhile, faced a downward trend in its share price after its first quarter results for fiscal 2024 (Q1-FY24) results fell short of market expectations, exacerbated by the impact of rising inflation on consumer spending. For the July - September quarter, HUL clocked in a net profit of Rs 2,656 crore, down 0.3 per cent from Rs 2,665 crore reported a year ago. Revenue, meanwhile, rose 3.1 per cent year-on-year (Y-o-Y) to Rs 15,364 crore. Sequentially, HUL’s revenue grew by 0.6 per cent, and net profit by 4 per cent.

That said, Grandhi expects global markets to remain volatile in the rest of the year amid the challenging economic landscape, the APAC region, he said, is likely to do well.

"Anticipations include India firmly advancing on the path to growth, with strong support from its services and manufacturing sectors; a projected uptick in exports of nickel and copper from Indonesia as the world moves toward a net-zero future, and improved investor sentiment for Japanese stocks as the central bank signaling a potential shift away from ultra-loose monetary policies and yield curve control," Grandhi said.