The market capitalisation of the world’s 100 largest public companies has increased by $1,040bn (5%) in 12 months, according to PwC’s Global Top 100 ranking, released today.
The rise is more subdued than the 15% increase reported in 2018, reflecting more challenging market conditions.
Growth in market capitalisation in the past year has been primarily driven by US companies, on the back of a robust economic environment. Both Greater China (-4%) and Europe (-5%) registered a decrease in market capitalisation, reversing last year’s gains.
The technology sector continues to dominate, although the healthcare, consumer services and telecommunications sectors performed most strongly over the past year.
For the fifth year running, the US accounts for more than half (54) of the Global Top 100 by number of companies with growth of 9%, outpacing the overall. US companies represent 63% of the total market capitalisation, up from 61% last year.
Greater China is the second largest component of the Global Top 100 by market capitalisation, despite a 4% decline in the past 12 months following trade uncertainties and their impact on local market sentiment. This contrasts with the 57% increase in 2018, when three new companies entered the Global Top 100 and two rose to the top ten.
Geopolitical challenges including uncertainty on Brexit are likely to have impacted European based companies in the ranking in the past year. Three European based companies have left the Global Top 100 and overall European based companies in the ranking lost 5% in market capitalisation. Recent trends for companies from the Rest of the World are more positive, with market capitalisation increasing by 22%.
Overall, the best performing country in the ranking in relative terms was India. Despite only two companies in the Global Top 100, a strong domestic stock market performance and robust earnings increased their market capitalisation by $63bn or 37%.
Ross Hunter, Partner and IPO Centre Leader, PwC UK comments:
“While the US continues to be the powerhouse of the Global Top 100, we expect to see a growing contribution from China, India and other developing markets. The new entrants from India and Saudi Arabia this year, and strong growth in the value of companies from the rest of the world support this view.”
The technology sector continues to be the largest component of market capitalisation within the Global Top 100, ahead of the financials sector, with healthcare in third place. Growth in the healthcare, consumer services and telecommunications sectors of 15% outpaced technology’s growth (6%), which experienced volatility in late 2018. Financials was the weakest performing sector with a 3% decline in market capitalisation.
The global top ten continues to be dominated by the technology and e-commerce companies – Microsoft, Apple, Amazon, Alphabet – followed by Facebook in sixth position and Alibaba and Tencent as numbers seven and eight, respectively.
Microsoft was the strongest performer in terms of absolute increase in market capitalisation, gaining $202bn or 29% in value compared to 2018, which propelled it into the top spot. It’s followed by Apple, Amazon and Alphabet. This breakaway group is 40% ahead of the fifth ranked company, Berkshire Hathaway, which has a market capitalisation of $494bn.
In the private company domain, the value of the top 100 unicorns grew by 6% to $815bn at 31 March 2019, consistent with their public company counterparts. Nearly half (48%) of the top 100 unicorns were from the US, also in line with what we see in the Global Top 100.
Notably, Greater China contributes approximately 30% of unicorns in both number and value terms, which is a much higher proportion than for the Global Top 100. As a significant source of future IPOs or acquisitions by other companies, this suggests that we can anticipate more entries from Greater China into the Global Top 100 in due course.
Ross Hunter, Partner and IPO Centre Leader, PwC UK:
“While the technology sector did not perform as strongly as in previous years, it continues to dominate the Global Top 100, with the top four US giants in a league of their own. Longer term, we anticipate the imbalance reducing, with Greater China technology companies, in particular, challenging the current position. The prominence of companies from Greater China amongst the unicorns may be evidence to support this.”
View the PwC Global Top 100 here.
Asia Poised to Become Dominant Market for Wind Energy
Asia could grow its share of installed capacity for onshore wind from 230 Gigawatt (GW) in 2018 to over 2600 GW by 2050, a new report by the International Renewable Energy Agency (IRENA) finds. By that time, the region would become a global leader in wind, accounting for more than 50 per cent of all onshore and over 60 per cent of all offshore wind capacity installed globally.
According to the “Future of Wind” published at China Wind Power in Beijing today, global wind power could rise ten-fold reaching over 6000 GW by 2050. By midcentury, wind could cover one third of global power needs and – combined with electrification – deliver a quarter of the energy-related carbon emission reductions needed to meet the Paris climate targets. To reach this objective, onshore and offshore wind capacity will need to increase four-fold and ten-fold respectively every year compared to today.
“With renewables, it’s possible to achieve a climate-safe future,” said IRENA’s Director-General Francesco La Camera. “Low-cost renewable energy technologies like wind power are readily-available today, representing the most effective and immediate solution for reducing carbon emissions. Our roadmap for a global energy transformation to 2050 shows that it is technically and economically feasible to ensure a climate-safe, sustainable energy future. Unlocking global wind energy potential will be particularly important. In fact, wind energy could be the largest single source of power generation by mid-century under this path. This would not only enable us to meet climate goals, but it would also boost economic growth and create jobs, thereby accelerating sustainable development.”
The global wind industry could become a veritable job motor, employing over 3.7 million people by 2030 and more than 6 million people by 2050, IRENA’s new report finds. These figures are respectively nearly three times higher and five times higher than the slightly over one million jobs in 2018. Sound industrial and labour policies that build upon and strengthen domestic supply chains can enable income and employment growth by leveraging existing economic activities in support of wind industry development.
But to accelerate the growth of global wind power over the coming decades, scaling up investments will be key. On average, global annual investment in onshore wind must increase from today USD 67 billion to 211 billion in 2050. For offshore wind, global average annual investments would need to increase from USD 19 billion to 100 billion in 2050.
Asia would account for more than 50% of global onshore wind power installations by 2050, followed by North America (23%) and Europe (10%). For offshore, Asia would cover more than 60% of global installations, followed by Europe (22%) and North America (16%).
Within Asia, China would take the lead with 2525 GW of installed onshore and offshore wind capacity by 2050, followed by India (443 GW), Republic of Korea (78 GW) and South-East Asia (16 GW).
Globally, the levelised cost of electricity (LCOE) for onshore wind will continue to fall to 2-3 cents USD/kWh by 2050 compared to 6 cents USD/kWh in 2018. Costs of offshore wind will drop significantly to 3-7 cents USD/kWh by 2050 compared to 13 cents USD/kWh in 2018.
Wind turbine size for onshore applications will increase, from an average of 2.6 megawatts (MW) in 2018 to 4-5 MW for turbines commissioned by 2025. Offshore applications will likely increase to 15-20 MW in a decade or two. Floating wind farms could cover around 5-15% of the global offshore wind installed capacity (almost 1 000 GW) by 2050.
Read the full report “Future of Wind”.
Global solar PV market set for spectacular growth over next 5 years
The installation of solar PV systems on homes, commercial buildings and industrial facilities is set to take off over the next five years, transforming the way electricity is generated and consumed, according to the International Energy Agency’s latest renewable energy market forecast.
These applications – known collectively as distributed PV – are the focus of the IEA’s Renewables 2019 market report, which was released today.
The report forecasts that the world’s total renewable-based power capacity will grow by 50% between 2019 and 2024. This increase of 1,200 gigawatts – equivalent to the current total power capacity of the United States – is driven by cost reductions and concerted government policy efforts. Solar PV accounts for 60% of the rise. The share of renewables in global power generation is set to rise from 26% today to 30% in 2024.
The expected growth comes after renewable capacity additions stalled last year for the first time in almost two decades. The renewed expansion remains well below what is needed to meet global sustainable energy targets, however.
“Renewables are already the world’s second largest source of electricity, but their deployment still needs to accelerate if we are to achieve long-term climate, air quality and energy access goals,” said Dr Fatih Birol, the IEA’s Executive Director.
The report highlights the three main challenges that need to be overcome to speed up the deployment of renewables: policy and regulatory uncertainty, high investment risks and system integration of wind and solar PV.
Distributed PV accounts for almost half of the growth in the overall solar PV market through 2024. Contrary to conventional wisdom, commercial and industrial applications rather than residential uses dominate distributed PV growth, accounting for three-quarters of new installations over the next five years. This is because economies of scale combined with better alignment of PV supply and electricity demand enable more self-consumption and bigger savings on electricity bills in the commercial and industrial sectors.
Still, the number of solar rooftop systems on homes is set to more than double to some 100 million by 2024, with the top markets on a per capita basis that year forecast to be Australia, Belgium, California, the Netherlands and Austria.
“As costs continue to fall, we have a growing incentive to ramp up the deployment of solar PV,” said Dr Birol. The cost of generating electricity from distributed solar PV systems is already below retail electricity prices in most countries. The IEA forecasts that these costs will decline by a further 15% to 35% by 2024, making the technology more attractive and spurring adoption worldwide.
The report warns, however, that important policy and tariff reforms are needed to ensure distributed PV’s growth is sustainable. Unmanaged growth could disrupt electricity markets by raising system costs, challenging the grid integration of renewables and reducing the revenues of network operators. By reforming retail tariffs and adapting policies, utilities and governments can attract investment in distributed PV while also securing enough revenues to pay for fixed network assets and ensuring that the cost burden is allocated fairly among all consumers.
“Distributed PV’s potential is breathtaking, but its development needs to be well managed to balance the different interests of PV system owners, other consumers and energy and distribution companies,” Dr Birol said. “The IEA is ready to advise governments on what is needed to take full advantage of this rapidly emerging technology without jeopardising electricity security.”
According to the report’s Accelerated Case, improving economics, policy support and more effective regulation could push distributed PV’s global installed capacity above 600 GW by 2024, almost double Japan’s total power capacity today. Yet this accelerated growth is still only 6% of distributed PV’s technical potential based on total available rooftop area.
As in previous years, Renewables 2019 also offers forecasts for all sources of renewable energy. Renewable heat is set to expand by one-fifth between 2019 and 2024, driven by China, the European Union, India and the United States. The heat and power sectors become increasingly interconnected as renewable electricity used for heat rises by more than 40%. But overall, renewable heat potential remains vastly underexploited. The share of renewables in total heat demand is forecast to remain below 12% in 2024, calling for more ambitious targets and stronger policy support.
Biofuels currently represent some 90% of renewable energy in transport and their use is set to increase by 25% over the next five years. Growth is dominated by Asia, particularly China, and is driven by energy security and air pollution concerns. Despite the rapid expansion of electric vehicles, renewable electricity only accounts for one-tenth of renewable energy consumption in transport in 2024. And the share of renewables in total transport fuel demand still remains below 5%. The Accelerated Case sees renewables in transport growing by an additional 20% through 2024 on the assumption of higher quota levels and enhanced policy support that opens new markets in aviation and marine transport.
Reforms in Latvia must result in stronger enforcement to tackle foreign bribery
Latvia has continued to improve its framework against bribery of foreign public officials and subsequent money laundering but the reforms need to translate into further effective enforcement, according to a new report by the OECD Working Group on Bribery.
According to the Working Group, which is composed of 44 countries, Latvia’s enforcement results are still not commensurate with the country’s exposure to foreign bribery and subsequent money laundering. Since Latvia joined the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions in 2014, no foreign bribery case has been prosecuted and three foreign bribery investigations are ongoing. Proceeds of foreign bribery have been laundered through some Latvian banks and other corporate entities in at least two multijurisdictional bribery cases. However, while waiting for the outcome of recent prosecutions in court, the money laundering conviction rate remains low. The Working Group also regrets that the Minister of Justice’s repeated and open criticism of the Prosecutor General risks creating political interference into the operation of the Public Prosecutor Office.
The Working Group has just completed its Phase 3 evaluation of Latvia’s implementation of the Convention and related instruments. In order to improve Latvia’s implementation of the Convention, the Working Group has recommended that Latvia take certain measures, including that it should:
Provide sufficient resources and expertise to its authorities to effectively investigate and prosecute foreign bribery and subsequent money laundering cases;
Step up its enforcement actions against companies, especially against Latvian financial institutions and other corporate entities involved in foreign bribery schemes, where relevant;
Reinforce coordination between Latvia’s anti-corruption law enforcement body (KNAB), the State Police and the prosecutors and implement a strategic approach towards foreign bribery and subsequent money laundering investigations;
Strengthen detection of Latvian individuals and companies involved in foreign bribery;
Ensure the efficient operation of the banking supervisory body (the FCMC), to contribute to the prevention and detection of foreign bribery and subsequent money laundering.
The Report highlights positive aspects of Latvia’s efforts to fight foreign bribery. Latvia took steps to strengthen KNAB’s functional independence. Latvia also adopted comprehensive legislation on whistleblower protection and increased sanctions against individuals for foreign bribery, money laundering and false accounting offences. A lower evidentiary threshold to prove money laundering has been introduced and the number of cases prosecuted has increased. Reforms have been implemented to enhance the Financial Intelligence Unit’s operational capacity. Latvia’s efforts to upgrade its legislative and regulatory framework to prevent money laundering in the financial sector are welcome together with Latvia’s financial sector supervisor’ efforts to renew its approach to supervision of financial institutions. Whether these developments will substantially contribute to more detection and enforcement of the foreign bribery offence remains to be tested in case law and practice.
Latvia’s Phase 3 Report was adopted by the OECD Working Group on Bribery on 10 October 2019. The Report lists the recommendations the Working Group made to Latvia on pages 82-88, and includes an overview of recent enforcement activity and specific legal, policy, and institutional features of Latvia’s framework for fighting foreign bribery. In accordance with the standard procedure, Latvia will submit a written report to the Working Group within two years (October 2021) on its implementation of all recommendations and its enforcement efforts. This report will also be made publicly available.
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