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Despite facing challenges such as high inflation environment, global financial turmoil, geopolitical tensions, and rising interest rates, the top 50 Asia-Pacific (APAC) companies have managed to increase their aggregate market capitalisation (MCap) by $437 billion quarter-on-quarter (QoQ) in the first quarter (Q1) ended on 31 March 2023, says GlobalData, the data and analytics company.
Companies from the financial services and technology sectors topped the list with an aggregate market valuation of $1.8 trillion and $2.2 trillion, respectively. Out of the top 50 companies, 15 belong to the financial services sector while 12 belong to the technology sector. Geographically, the majority of the companies, 24 in number, are from China, followed by 11 from Japan and six from India.
China Telecom, LG Energy Solution, Shin-Etsu Chemical, China Petroleum & Chemical, and Keyence witnessed the highest quarter-on-quarter (QoQ) growth of more than 25%, whereas JD.com and Meituan saw their MCap eroding by more than 15%.
Murthy Grandhi, Business Fundamentals Analyst at GlobalData, comments: “During the first quarter, 72% of the top 50 companies saw their MCap increasing from the previous quarter. The removal of zero-COVID policy and the decision to permit foreign-funded financial institutions to go public have generated a real sense of hope regarding economic revival and played a significant role in the resurgence of Chinese capital markets.”
State-owned telecom giant China Telecom rallied owing to positive performance in its industrial digitalisation business and increase in average revenue per user (ARPU). The company focused heavily on cloud computing, 5G, and digital infrastructure. Battery manufacturer LG Energy Solution delivered stellar FY2022 results with year-on-year increase of 43.4% in revenue and 57.9% rise in operating profit. The company’s plans to increase capex by more than 50% from the previous year’s KRW6.3 trillion ($5.5 billion) resulted in positive momentum in share price.
Chemicals giant Shin-Etsu Chemical witnessed a 30.1% rise in MCap due to overall positive performance from all business segments for the nine-months ended 31 December 2022. Oil and gas enterprise China Petroleum & Chemical and industrial equipment company Keyence also experienced a rally due to positive financial performance, with the former benefitting from tailwinds from the international crude price.
Grandhi adds: “Due to the removal of COVID-19 restrictions, China’s largest e-commerce company JD.com reported a 22% fall in MCap, which might affect its profits because of a pricing war with competitors Pinduoduo and Alibaba. Food delivery giant Meituan continued its bearish trend because of lower margins and stiff competition creating headwinds.”
Among the Indian firms, Infosys market cap fell by 6% amid concerns about the impact of the ongoing global banking crisis on the growth of IT companies and the recent top management exits. Reliance Industries tanked 5% in MCap owing to the declining oil-to-chemical segment margins, low average revenue per user from the telecom segment, and sell-off by foreign institutional investors and overall negative market sentiment in the Indian equity markets.
Grandhi concludes: “Although global markets in 2023 may continue to remain volatile amidst the prevailing tough market environment, APAC will continue to be a bright spot. Rise in domestic demand and inbound tourism, reopening and recovering of economic activities in China and Hong Kong, easing of supply chain disruptions, and regional free-trade agreements could fuel the growth in the region.”
