PwC: 100 leading global companies experienced the largest decline in market capitalization since 2009.

The market capitalization of the 100 leading global companies fell by 11 percent in 2023, or nearly $3.8 trillion, marking the first annual decline since 2016 and the largest drop since the global financial crisis of 2009 (-39 percent), according to a new PwC analysis in the published report on the 100 leading global companies.

The challenging macroeconomic environment caused by ongoing tightening of fiscal policy, high inflation, and uncertainty in the American and European banking sectors has weighed on global capital markets. The United States, which accounts for the largest number of companies on the list of the 100 leading global companies, was the main driver of this decline reducing its value by $2.9 trillion. However, with its share on the list, it maintained the top position, ahead of Saudi Arabia and China. Europe outperformed all other regions, increasing its share of the 100 leading global companies from ten percent in 2022 to 13 percent in 2023, climbing to second place on the regional list.

– PwC’s Global Top 100 report continues to provide important insights into the most significant trends driving the global economy and key dynamics in global equity markets. The challenges in the market over the past year have clearly impacted the largest global companies. However, the recovery of most sectors in the first quarter of 2023 and the growth of companies in Europe provide a reason for cautious optimism – said Stuart Newman, global head of the IPO center and partner at PwC UK.

Europe performs better, the US still dominates

American companies maintained their dominant share (70 percent) among the 100 leading global companies, but suffered a decline of 12 percent, corresponding to an amount of three trillion dollars, with a final amount of $21.7 trillion. Europe was the only region that achieved growth, at 9.5 percent, while China and its regions fell by 7.3 percent, and the rest of the world by 26.3 percent.

Few countries in the Global Top 100 report managed to increase their market capitalization during the year. The only countries that recorded an increase were those in Europe due to a combination of new participants and growth in market capitalization compared to comparable data from the previous year.

At the individual country level, France entered 2023 as the fourth among the top five countries ($980 billion), replacing Switzerland ($765 billion) and climbing ahead of the United Kingdom, which ranks fifth ($852 billion). Despite double-digit declines, the US (-12 percent), Saudi Arabia (-18 percent), and continental China (-11 percent) maintained their positions among the top three and were the only countries with a combined market capitalization of over $1 trillion.

Key sectors are declining

At the sector level compared to comparable data from the previous year, all key sectors recorded a decrease in market capitalization, in the following order: discretionary consumption (-23 percent), communication services (-18 percent), financial services (-11 percent), and energy (-10 percent). Finance and discretionary consumption accounted for 56 percent of the total decline in market capitalization.

Despite a boost in the technology sector in the first quarter of 2023, the technology sector overall fell by eight percent, marking its first decline in ten years. However, the technology sector increased its share on the list of the 100 leading global companies, rising from 27 percent in 2022 to 28 percent in 2023, thus maintaining its leading position among companies listed in the Global Top 100.

Changes in the composition of the list

This year, there were no direct entries of new companies into the list of the 100 leading global companies based on initial public offerings (IPOs), as was expected given that the global IPO market was less active. Since March 2022, ninety-one companies have retained their place on the list for 2023, showing greater stability among the 100 leading global companies in 2023 compared to the previous year.

The top five companies retained their positions on the ranking, but for the first time in 10 years, all recorded a decline in market capitalization, which accounted for 50 percent of the total decline in market capitalization this year, according to PwC’s statement.