(MENAFN - Kuwait News Agency (KUNA)) The banking sector has accounted for 16 percent of the market capitalization of the world's biggest 500 firms after the sector saw its market capitalization rise by 29 percent to USD 4.2 trillion in 2012, QNB Group said in its weekly report Saturday.
The total value of the world's largest 500 listed companies, measured by market capitalization, has increased by 13 percent in 2012 to USD 26.0 trillion, according to data compiled by the Financial Times for its FT Global 500 list.
Bank stocks came under pressure during 2011 owing to concerns about their exposure to the European sovereign debt crisis and about the impact of new regulations and deleveraging, according to QNB Group.
A number of factors led to a strong recovery in bank share prices in 2012. These included the easing of tensions in the Eurozone, despite the fact that fundamental challenges remain, relating to the region's sovereign debt, weak economic growth and rising unemployment.
Additionally, the outlook for the global economy became increasingly positive towards the end of the year. The US housing sector, which was a principal trigger of the 2008 financial crisis, is recovering, improving the outlook for banks that were exposed to this sector. As a result, it was the leading U.S. and European banks that contributed most to growth in market capitalization in 2012, the report said.
The outlook for US banks benefited from the recovery in the US housing market and broader economy. The collective increase in market capitalization for the seven US banks in the Global 500 hit USD 195 billion in 2012, 17 percent of the value of banks in the rankings. In Europe, HSBC, Lloyds Banking Group and Unicredit were the strongest contributors to bank market capitalization growth in 2012. These banks benefited from the easing of Eurozone tensions, it showed.
Tensions eased because the European Central Bank offered banks two rounds of unlimited collateralized loans at very low interest rates, backed sovereign debt in the region and the EU put in place strongly capitalized and permanent financial stability mechanisms. In addition, progress was made on an agreement to bring Europe-wide banking oversight under a single supervisor by 2014.
The 11 Chinese banks in the Global 500 at end-2012 accounted for 23 percent of the sector's market capitalization, ahead of the US banks' 17 percent share. This included the world's two largest banks by capitalization: the Industrial and Commercial Bank of China, which grew by four percent to USD 236 billion, and China Construction Bank, which grew by 14 percent to USD 200 billion.
Taken together, the 11 top Chinese banks' market capitalization grew by 11 percent to USD 962 billion in 2012. They were boosted towards the end of the year by strong government support, a new leadership that has emphasized domestic investment and consumption and positive economic data.
Oil and Gas Producers, the second largest sector, saw market capitalization falling by two percent in 2012, despite small increases in global oil prices and production, it added.
Brent oil prices were 0.4 percent higher on average in 2012 at USD 111.8 per barrel. Total global oil production was 2.7 million barrels per day (b/d) higher at 90.8 million b/d, on average, in the first three quarters of 2012 versus the same period in 2011.
However, most of the increase in production was from OPEC (1.8 million b/d), which is largely controlled by unlisted state-owned producers. As a result, investors were broadly neutral on publicly listed oil producers during 2012.