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MENAFN - Arab News - 07/11/2012

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(MENAFN - Arab News) The Financial Times (FT) recently released its list of the top 500 global companies by market capitalization as at end-September 2012. The total market capitalization of the top 500 companies increased 17 percent from September 2011 to September 2012 to 25 trillion, equivalent to about 35 percent of global GDP.

The strong performance of the leading global stocks has been supported by rising global market capitalization during this period, according to QNB Group. The MSCI All Country World Index for Large Capitalized Companies rose 18 percent in the year to end-September as concerns about sovereign debt in advanced economies, particularly the euro zone, have eased and central banks have maintained highly accommodative policies by extending quantitative easing or expanding lending and stability funds.

This led to higher market capitalization at the end of September, but there are significant downside risks with the global economic outlook deteriorating and further sovereign debt tensions could emerge.

There are six GCC companies in the top 500 global list and their capitalization rose 3 percent from September 2011 to September 2012 to 191 billion.
GCC's leading companies have underperformed the rest of the world over this period as they have been less affected by the alleviation of sovereign debt concern in advanced economies and as their exposure to euro zone debt, in particular, is lower than the other large corporations. Broadly speaking, the GCC companies have seen steady growth in market capitalization with little impact from sovereign debt crises.

Meanwhile, many other global companies have recovered sharply after their market capitalization was driven lower by the sovereign debt crisis.
In terms of sectors, technology hardware and software companies have performed particularly strongly, accounting for 2.6 trillion of market capitalization in September 2012, up by 27 percent from a year earlier.

Banks and financial services companies have also performed well as they have been direct beneficiaries of the easing of tensions related to sovereign debt. There were 90 financial companies in the top 500 accounting for 4.3 trillion of market capitalization in September 2012, up by 18 percent from a year earlier, broadly in line with growth in the overall top 500. Oil and gas producers accounted for 3.1 trillion of the total index in September 2012, up by 11 percent from a year earlier. Oil prices have averaged 111 per barrel over this period, a relatively high level compared with historical averages. This has supported the market capitalization of energy producers.

Apple remained the largest listed company in the rankings with a market capitalization of 625 billion, an increase of 77 percent from end-September 2011. Apple has outperformed the world's other largest-listed companies whose market capitalization changed by the following amounts from September 2011 to September 2012.

Apple's out-performance has been boosted by escalating sales volumes and high expectations of future sales, according to QNB Group. Apple sold 27 million iPhones in the third quarter of 2012, a 58 percent year-on-year increase, while iPads were up 26 percent to 14 million.

PetroChina has lost ground against the other leading global companies, mainly as the cost of importing natural gas on the supply side, including from Qatar, has risen while on the resale side domestic gas prices, which are set by the government, have remained stable. This has driven down profits and led to a declining share price and market capitalization.

The company with the largest market capitalization in the MENA region is Saudi Basic Industries Corp. (SABIC), which is predominantly a petrochemicals company but also produces fertilizers and steel. Its market capitalization reached 73 billion at the end of September 2012 and it ranked 81st in the top 500 global companies. Although production has increased, weaker prices for its products and slow global growth have led to lower profits for the company in each of the last four quarters. SABIC reported profits of 1.7 billion in the third quarter of 2012, 23 percent lower than profits in the same period of 2011.

Two Qatari companies make the FT top 500 list. Market capitalization at QNB and Industries Qatar (IQ) rose 5 percent and 15 percent, respectively, in the year to September 2012.

The strong performance of IQ is primarily owing to higher fertilizer production, which has driven revenue and profits higher at stable prices. New production facilities, with capacity of 4.3 million tons per year of ammonia and 3.8 million tons per year of urea, have been launched and ramped up. In the third quarter of 2012, net profit was 7 percent higher than in the third quarter of 2011.

QNB's rising market capitalization comes on the back of strong financial results. Profits for the first nine months of 2012 reached 1.7 billion, 15 percent higher than in the same period of 2011. Total assets grew by 25 percent to 96 billion from September 2011 to September 2012, total loans by 42 percent to 66 billion and customer deposits by 37 percent to 74 billion over the same period. These strong results have allowed QNB to maintain its position as the leading financial institution in the MENA region with the highest level of net profit, total assets, loans and deposits.


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