African share prices go up and they go down but the value of the continent’s biggest companies remains substantially lower than those in the rest of the world, particularly when the multinationals listed on the Johannesburg Stock Exchange are taken out of the equation.
The value of the top 25 companies in Asia is $2.4 trillion, or 2.87 times the size of Africa’s Top 250 Companies. In the two other main emerging market regions: Latin America’s top 15 firms are worth $800bn, or 0.95 times the African Top 250; and the Gulf’s top 15 are worth $313bn or 0.37 times the African Top 250.
On a per capita basis, Africa and particularly sub-Saharan Africa, is clearly under-represented in terms of the world’s biggest companies. Once South Africa, including its dual- and treble-listed firms, is taken out of the equation, the biggest company in sub-Saharan Africa is Dangote Cement with market capitalisation of $10.5bn. This compares with values of $276.8bn for PetroChina, $156.3bn for Petrobras, and $76.5bn for Sabic, the biggest companies in each of the other three regions.
Even developing India has three listed companies with values of $41bn to $43bn: Tata Consultancy Services, Reliance Industries and Oil & Natural Gas.
Another major difference between Africa and the rest of the world is in terms of the geographical spread of their largest companies. A massive 12 of out Asia’s 25 biggest companies are Chinese or based in Hong Kong; nine of Latin America’s top 15 are Brazilian; and seven out of 15 in the Gulf region are Saudi Arabian. Yet 13 out of the top 15 firms on the African continent are South African, demonstrating the scale of South Africa’s domination of the African continental economy.
Saudi Arabia is the most populous Gulf state to possess substantial listed companies, and both China and Brazil are the most populous countries in their respective regions.
South Africa is only the fifth most populous country on the African continent, behind Nigeria, Egypt, Ethiopia and Democratic Republic of Congo. Nigeria should overtake South Africa as the biggest economy on the continent in the medium term but its domestic companies are unlikely to exceed the value of South Africa’s corporate giants for a long time to come.
These figures from around the world also underline the growing influence of some emerging markets. The value of the top 15 Asian companies has risen over the past 12 months and, with the exceptions of Petrobras and Vale, so too have those in Latin America.
The Gulf states have endured a period of stagnation but it is Africa where share prices have fallen most sharply. This could be because investors are cutting their exposure to frontier emerging markets, including in sub-Saharan Africa, but African stock values have recovered strongly during the early part of 2012 and it will be interesting to see whether this trend can be sustained throughout this year.