Sometimes as stock market investors it is useful for us to step away from the daily noise created by market analysts, company CEO’s and news headlines and try to look at the big picture. One way to do this is to just get back to the basics and look at hard data to see if this helps us spot any trends regarding in the global economy. So it seems reasonable that a good place to start would be by looking at the top companies across the world to see who is making money and why.
There are many ways to rank companies globally. You could for example rank companies in order of market capitalisation, in terms of net profits or based on assets, but I like the list Forbes puts together since in their own words:
“Forbes’ ranking of the world’s biggest companies departs from lopsided lists based on a single metric, like sales. Instead, we use an equal weighting of sales, profits, assets and market value to rank companies according to size.”
So let us look at the top 20 companies according to Forbes and see what it might be telling us.
Forbes Global 2000 Top 20 Companies (April 2009)
For further information and more company lists see the The World’s Biggest Companies special report on the Forbes website.
The first thing that becomes obvious about the above list is that 40% of the companies in the Top 20 are in the oil and gas sector. Thus it seems even as we head into the second decade of the 21st century the oil and gas giants from the 20th century are still going strong, and my guess is they will still be well represented in the Forbes list for many years to come.
Another interesting aspect of the list is the lack of U.S. manufacturing focused companies present and this challenges the view many American’s have that they posses the best manufacturing sector in the world. In fact in terms of true global players the U.S. looks a bit light on the ground since AT&T is basically focused on the U.S domestic market and so is Wal-Mart to a large extent. I also think this list supports what I have believed for some time and wrote about in The U.S. auto industry bailout and some inconvenient truths and that is that the U.S. economy has benefited a lot from world history, as opposed to any superiority the U.S. worker has over their counterparts in other countries.
In addition the U.S. has abundant natural resources and fairly friendly neighbours so those factors also help the U.S. economy of course. But many U.S. companies are now struggling to compete with challengers in Asia and Europe and I doubt it is going to get any easier for corporate U.S.A from this point onwards.
I have not looked through all the information on the Forbes website yet, but from what I studied so far I would make a few very broad statements:
- Europe seems to be written off by many analysts these days but I actually think that the Eurozone has a lot of great quality companies and will be a good place to invest when things settle down.
- The emergence of China is reflected by growing number of Chinese companies creeping onto the list of leading corporations.
- Australia is yet to crack the Top 20 and BHP is our best performer at Number 52. If you dig into the data a little on the Forbes website you will see Australia has a pretty under developed tech sector… not the greatest launch pad for this century I would think.
But enough of my ramblings, I wonder what readers thinks of the Forbes list? Am I worrying too much about the lack of a significant tech sector in Australia for example or should we just focus on our strengths in commodities, farming and banking? Feel free to share your views and tell me what you think.