Chart of the Week: Top 10 Largest Companies Show Signs of Recovery

March 25, 2022

The world’s top 10 largest market capitalisation companies were struggling for most of the first quarter of this year.

This came amid uncertainties over the US Federal rate hikes, the continued inflationary pressure and the Russia-Ukraine war that broke out in mid-February.

Aside from Saudi Arabian Oil Co (SAR: 2222) – also known as Saudi Aramco – and Berkshire Hathaway Inc (NYSE: BRK.B) which recorded an increase of 19.98% and 17.34% year-to-date, respectively, the other eight companies have been in the red so far this year.

Bad start but signs of recovery emerging

Despite the bad start of the year for the largest companies, there are signs of recovery as seen by the rebound in most of the share prices over the last month despite the ongoing Russia-Ukraine war.

Aside from Taiwan Semiconductor Manufacturing Company Ltd (NYSE: TSM) (TPE: 2330), also known as TSMC, which fell by 3.0% over the last one-month, all the other mega-cap stocks in the top 10 list have rebounded.

Part of the reason for the fall in Taiwan Semiconductor Manufacturing’s share price  concern over Taiwan’s geopolitical status given its historical tense relations with China.

Russia’s ongoing military operation in Ukraine could embolden China to consider invading Taiwan in the future, as seen by the louder rhetoric recently.

Apple Inc (NASDAQ: APPL) and Microsoft Corporation (NASDAQ: MSFT) lead the top 10 market cap list but if not for the recovery in the last month, Saudi Aramco would have caught up with the two technology giants.

Instead, both Apple and Microsoft retained their positions although both companies have recorded a decline of 1.85% and 9.39% in their total return, respectively, so far this year.

Despite the decline, Apple’s current market cap is not far from the US$3 trillion mark.

Meanwhile Meta Platforms Inc (NASDAQ: FB), which is the owner of Facebook, the world’s largest social media network, has been the worst performer among the top 10 largest market cap companies. Year-to-date, Meta has seen a decline of 34.7% in its total return.

However, if not for the rebound recently, its market cap would have been even lower than TSMC.

While it is too early to say if the worst is over for the big companies, I believe that the selloff at the beginning of this year has largely priced in the seven interest rate hikes that the US Federal Reserve (Fed) is forecasting for this year.

Now that the cards are out, I think it offers up a good opportunity for long-term investors to accumulate some of the best-run companies in the world.

Source: Bloomberg, ProsperUs (as at 24 March 2022)

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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