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One-tenth of world’s largest companies from Nigeria, others — Report

By on May 8, 2014

Public companies in developing economies other than the BRIC countries (Brazil, Russia, India and China), now account for more than one in ten of the world’s largest 2,500 groups by market value for the first time.

Analysis by Strategy &, the consultancy firm formerly known as Booz and Company, shows that of the 2,500 largest listed companies, 270 were from other emerging markets such as Mexico, Nigeria and Thailand at the end of 2013.

According to Financial Times, this marks a decade of consistent growth in the prominence of these groups, which have more than doubled in number in this top ranking since 2004.

The change is part of a wider shift between developed and emerging economies, which has seen the proportion of groups in North America and western Europe fall as a proportion of this top echelon compared with companies from less mature markets.

Back in 2004, North America and western Europe made up almost seven in ten of the world’s largest companies, but now they are little more than half.

In terms of market capitalisation, companies from these other emerging markets were also at a record last year, amounting to seven per cent of the 2,500 largest. The proportion represented by western Europe was at a low of 20 per cent, with North America accounting for one-third of the total – down from more than two in five back in 2004.

Japan, meanwhile, accounts for just six per cent of the whole – its lowest level for several years, and just half its level in 2006.

“There has been a decline in the average market value of European companies, whereas for groups in North America, there has not been the same loss of average market cap”

Per-Ola Karlsson, a Strategy & partner, says the change is “a true description of a shift in economic power”.

He says the movement is partly the result of growth in these economies but also about the greater access to capital markets now available.

Among those that have joined the list of the 2,500 largest groups are emerging market offshoots of developed economy groups, such as Brazil’s financial group Banco Santander Brasil, and Africa’s Nestlé Nigeria.

But the changes also reflect the declining fortunes of some companies in developed markets. Covance, the US clinical research group, has slipped out of the 2,500 largest groups by market value, as has Securitas, the Sweden-based security group.

Karlsson says that despite the sharp fall in the number of companies both in North America and western Europe within the top 2,500, other figures point to the resilience of the US economy compared with western Europe.

While western Europe has fallen back both in terms of number of companies in the top 2,500 and in terms of average market value, the North American groups in this cohort have remained stronger.

“There has been a decline in the average market value of European companies, whereas for groups in North America, there has not been the same loss of average market cap,” Karlsson says.

[Punch]