Friday, July 1, 2011

The World's Biggest Businesses

Chart for ICBC (ASIA)
Chart for Apple Inc.
Chart for BG GROUP
, 1:00, Thursday 30 June 2011
For 15 years, the Financial Times has produced a yearly FT Global 500 report reviewing the world's 500 largest listed companies. I covered the 2010 report last June in The World's Biggest Firms, so let's see what's changed over the past year.
Monsters of capitalism
At 31 March 2010, the total market capitalisation of the Global (Chicago Options: ^RGITRUSD - news) 500 companies was $23.5 trillion, up almost 51% from $15.6 trillion a year earlier.
Twelve months on, the combined value of capitalism's colossuses was $26.2 trillion, up 11.5% and almost perfectly in line with a 12% rise in the FTSE All-World (FTSE Index: AW01.FGI - news) index.
A year ago, oil behemoths PetroChina and Exxon Mobil (NYSE:XOM - news) were number one and two in the world rankings, but have swapped places in the latest survey. The lowest-ranking company, at number 500, is worth $19 billion this year, versus $16 billion in the 2010 survey.
Banks (Euronext: SBK.NX - news) make up the biggest sector, with a combined value of $4.4 trillion, followed by oil companies at $3.8 trillion.
Earth's five biggest businesses
Rank2011Rank2010CompanyCountrySectorMarketcap ($bn)PER*Yield(%)
12Exxon MobilUSOil & gas (Euronext: IXSOG.NX -news) producers41713.52.1
21PetroChinaChinaOil & gas producers32612.63.1
35Apple (NasdaqGS: AAPL - news)USTechnology hardware & equipment32123.00.0
44Industrial (Santiago: INDUSTRIAL.SN - news) & Commercial Bank of ChinaChinaBanks25111.43.6
513Petrobras (Madrid: XPBR.MC - news)BrazilOil & gas producers2479.32.5
Source: FT Global 500; data as at 31/03/11
* PER = price/earnings ratio
As you can see, our top five is made up of two US corporations, two Chinese companies and a Brazilian business. Three of the five are oil and gas producers, with a bank and Apple, the world's favourite tech firm, completing the top five.
Microsoft (NasdaqGS: MSFT - news) , third last year, has dropped to tenth, while its deadly rival Apple has climbed two places from fifth to third. Petrobras -- Brazil's national oil champion -- is a new entry, having leapt from 13th place to fifth.
Of these five, the biggest increase in market cap was seen at Exxon Mobil, whose value surged $88 billion to $417 billion, up 27%. Together, these five global Goliaths are worth $1.6 trillion. This is roughly three-fifths (60%) of the market cap of the entire FTSE 100 (Euronext: VFTSE.NX - news) index.
Britain's biggest businesses
In total, 34 UK-listed firms make the FT Global 500. Here are the 10 largest:
Rank2011Rank2010CompanySectorMarketcap ($bn)PERYield(%)
66BHP Billiton (Hamburg: BHP1.HM - news)Mining (Euronext: SMIG.NX - news)24722.01.7
819Royal Dutch ShellOil & gas producers22810.94.7
1820HSBC (LSE: HSBA.L - news)Banks18213.93.4
3042Vodafone GroupMobile telecoms14611.34.6
3135Rio Tinto (Berlin: CRA1.BE - news)Mining1449.51.5
3718BPOil & gas producers137N/A1.5
5350GlaxoSmithKline (Other OTC: GLAXF.PK - news)Pharmaceuticals & biotechnology9938.15.3
6861Unilever (Other OTC: UNLNF.PK - news)Food producers8715.53.6
70103BG Group (Hamburg: BGO.HM - news)Oil & gas producers8424.60.8
7879British American TobaccoTobacco8017.74.5
Source: FT Global 500; data as at 31/03/11
As you can see, it was a pretty good year for British businesses, with of six these top 10 moving up in the world rankings.
BHP Billiton stayed in sixth place as the UK's most valuable listed company. However, BP had a terrible year, falling to 37th ranking from 18th. GSK slipped three places to 53rd and Unilever slid seven places to 68th.
Canary Wharf PA
The total market value of these ten titans exceeds $1.4 trillion, which means that they account for more than half of the FTSE 100's total market cap.
Bagging giant bargains
Looking at both tables above, a few firms demand further research. Among the 'global top five', Petrobras (trading on 9.3 times earnings, with a dividend yield of 2.5%) and ICBC (HKSE: 0349.HK - news) (trading on 11.4 times earnings, with a dividend yield of 3.6%) don't look expensive at first sight.
Similarly, among my ten British titans, Royal Dutch Shell trades on a P/E of 10.9 and yields 4.7%, while mobile leviathan Vodafone (LSE: VOD.L - news) has a P/E of 11.3 and yields 4.6%. Dividend devotees should also take a peek at GSK, yielding 5.3%, and fags firm BAT, which yields 4.5%.
In summary, there are plenty of quality businesses in these lists for investors to probe, whether you favour oil giants, massive miners, big banks or other sectors.
However, before you go bargain-hunting among these huge companies, remember that the above  information is already almost three months out of date. Therefore, please do your own research before buying!

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