New York: American stocks are dominating global equities by the most in
a decade, taking a majority of the spots in a ranking of the 20 biggest
companies, after earnings rose faster than the rest of the world as the
global economy rebounded.
Apple Inc., International Business Machines Corp., Wells Fargo &
Co. and four more US companies joined the top 20 since stocks peaked in
2007, bringing the total to 14, according to data compiled by Bloomberg.
They replaced Moscow-based Gazprom OAO,
China Petroleum & Chemical
Corp. in Beijing,
Petroleo Brasileiro SA of Rio de Janeiro and six
others from Europe and Asia. Of the nine added, only
BHP Billiton Ltd.
and Nestle SA are based outside the US.
More US corporations are represented than any time since 2003 after 10
quarters of economic expansion and profit growth lifted the
Standard
& Poor’s 500 Index 109 per cent since shares bottomed in March 2009.
The shift reflects volatility in emerging markets and shows how
innovation builds value in the US.
“The US is just the best place on the planet to have a great idea and
turn it into a big business,” according to Michael Shaoul, chairman of
New York-based Marketfield Asset Management, which oversees $2.7 billion
(Dh9.9 billion).
“There’s another reason for this list to have shifted and that is the
falling of prior darlings,” Shaoul said. “A lot of the ones which have
fallen are energy and emerging-market related.”
Reasons for strength
American companies are gaining strength in part because of Europe’s
sovereign debt crisis. While the S&P 500 fell 0.5 per cent last week
to 1,411.13, retreating from a four-year high, amid concern European
leaders will fail to preserve the 17-nation currency union, the Euro
Stoxx 50 Index slid 1.5 per cent. S&P 500 futures added 0.1 per cent
to 1,410.6 at 8.52am in London on Monday.
Computer and software makers became the top industry in the S&P
500, overtaking financial companies, as Apple and
IBM joined Google Inc.
and
Microsoft Corp. among the biggest stocks. The last time a non-US
technology producer made the global ranking was in 2001, when
Finland-based
Nokia Oyj was the world’s largest mobile phone maker.
Nokia’s market value has fallen by 92 per cent since Apple introduced
the iPhone in 2007.
The Cupertino, California-based maker of
iPad computers last week
became the most valuable US company ever as the stock rose to $668.87 on
August 22, giving the company a value of $627 billion. Apple, which
approached bankruptcy in 1997, has jumped more than 80-fold in the past
decade.
IBM’s market value more than doubled over the decade as the company
shifted its strategy toward more profitable software sales and away from
hardware and consulting. The New York-based company, with a market
capitalisation of $226 billion, closed the gap with Microsoft, valued at
$256.2 billion, to become the No. 3 technology maker and the world’s
seventh-biggest company.
Microsoft, based in Redmond, Washington, was worth four times as much
as IBM in 1999. Mountain View, California-based Google, owner of the
world’s most popular search engine, is valued at $222.6 billion.
No match to Apple, Google
“There are not a lot of other companies that can compete with the
Googles and the Apples of the world,” Jeffrey Saut, chief investment
strategist at Raymond James & Associates in St. Petersburg, Florida,
said. “We have probably the most cutting-edge companies in the
technology space that exist today. Who can match Apple? I can’t think of
anybody.”
Computer and software makers represent 20 per cent of the S&P 500.
The industry’s weighting outside the US is 4 per cent, as measured by
the MSCI World ex-US Index.
Profit growth drove the US gains. The 14 biggest US companies earned
$248.4 billion in the last 12 months, more than double the total made by
the 67 companies in Brazil’s Bovespa Index. Their market value reached
$3.57 trillion, about the size of Germany’s 2011 gross domestic product.
Earnings at the seven newly added American companies surged 40 per cent
during the past four years, while income for the 13 non-US firms that
made the 2007 list rose 6 per cent, data compiled by Bloomberg show.
The ranking reflects the US economy, where growth climbed back toward
pre-2008 levels faster than other countries. Gross domestic product is
forecast to gain 2.2 per cent this year, according to the median
estimate of 78 economists surveyed by Bloomberg. That compares with an
average of 2.6 per cent between 2002 and 2007, before the credit crisis,
the data show.
Growth declines elsewhere
China is projected to expand by 8.1 per cent, compared with its mean
rate of 11.2 per cent before the global recession. Brazil’s GDP may
increase 1.9 per cent, down from an average of 3.8 per cent. Russia may
grow by 3.8 per cent, next to 7.1 per cent in the five years before the
credit crisis.
“People perceive not only better growth for the US, but also less
risk,” Chris Leavy, the chief investment officer of fundamental equities
at New York-based
BlackRock Inc., which oversees $3.56 trillion as the
world’s biggest money manager, said in an August 22 interview.
Investors are demanding more profit to reward companies with higher
stock prices than before the credit crisis shattered confidence in
equities. The average capitalisation of the largest 20 companies shrunk
17 per cent to $242.5 billion since 2007 even as profits surged almost
fourfold to $18.8 billion, data compiled by Bloomberg show.
The biggest companies, dominated in 2007 by commodity explorers and
enterprises controlled by China’s government, traded at an average
price-earnings ratio of 57.6, the data show. Today, after the addition
of two American technology developers and a California bank, the average
valuation is 12.9, according to the data.
“It’s so commonplace in this country to vilify corporations, but the
truth is the American corporate structure has worked very well,” David
Kelly, chief market strategist at JPMorgan Funds in New York, said in an
August 22 phone interview. His firm oversees about $348 billion. “There
are other countries which are doing very well economically, but don’t
do as good a job as inventing and reinventing themselves.”
The S&P 500 trailed the rest of the world in the previous bull
market as accelerating growth in China boosted demand for commodities
from Brazil to Russia. The index rose 99 per cent during the five-year
rally that ended in October 2007, lagging behind a 187 per cent gain by
the MSCI World ex-US Index and a 416 per cent surge in an MSCI gauge
tracking 21 emerging markets. - Bloomberg
Samsung share price drops on Apple patent ruling
How South Koreans view Samsung ruling
STORY HIGHLIGHTS
- NEW The share price of Samsung Electronics dropped nearly 7.5% in trading Monday
- Comes after a California jury awarded Apple $1.05 billion in a patent dispute with Samsung
- The tumble erased about $12 billion from the South Korean electronics giant's market value
(CNN) -- The share price of Samsung Electronics
dropped nearly 7.5% in trading Monday as investors had their first
opportunity to react to the more than $1 billion decision against the
Korean electronics giant by a California jury for infringing on Apple
patents.
Samsung dropped 6.3% at
the open of South Korea's Kospi index and finished the day down 7.45%,
after dropping as much as 7.7%. The tumble erased about $12 billion from
the company's market value Monday.
Samsung is planning to
appeal Friday's decision
of a U.S. federal jury which awarded Apple $1.05 billion for copying
the look and feel of iPhones and iPad design. The jury rejected
Samsung's counterclaims against Apple.
A senior Samsung
executive told the Korea Times the decision was "absolutely the worst
scenario for us" as he was heading into an emergency meeting at the
company's Seoul headquarters on Sunday.
The decision could lead
to the prohibition of sales in the U.S. of Samsung smarphones and
computer tablets found to have violated Apple's patents. A hearing on
the matter is scheduled for September 20.
Apple vs. Samsung: Tale of two countries
"As far as the money
damages are concerned, (Samsung) will make that up in the long run. The
bigger issue at the moment them having to come up with new and unique
designs appealing to the customer base," said Christopher Carani,
chairman of the design rights committee of the American Bar Association.
"It will lead to fewer
choices, less innovation, and potentially higher prices," Samsung said
in a written statement after Friday's decision. "It is unfortunate that
patent law can be manipulated to give one company a monopoly over
rectangles with rounded corners, or technology that is being improved
every day by Samsung and other companies."
Apple, meanwhile, praised the court for "sending a loud and clear message that stealing isn't right."
"The mountain of
evidence presented during the trial showed that Samsung's copying went
far deeper than even we knew," the company said in a statement.
A nine-person jury spent
just two and a half days puzzling out its final verdict, with weeks of
notes and memories of testimony, 109 pages of jury instructions, and
boxes of evidence including a collection of contested smartphones and
tablets as their guide.
The jury award shows the
growing importance of design for electronics makers. In 2001, Apple and
Samsung were awarded 10 and eight U.S. design patents, respectively.
This year, Apple could have as many as 333 design patents approved,
while Samsung could have as many as 500, Carani said.
"Central to the U.S.
case and at its very core was design rights, the way things look, and
that's really where the large amount of this billion-dollar damages
judgment comes from," Carani said.
The lawsuit is the
largest yet in the ongoing worldwide patent brawl between the two
companies, which itself is just one battle in Apple's war against
Google's Android mobile operating system. On Friday, a South Korean
court found that both parties had infringed on each other's patents,
banning the sale of the iPhone 3GS, iPhone 4, two iPad models and
Samsung's Galaxy S2.
The Korean court ordered Apple to pay Samsung $35,000 and Samsung to pay Apple $22,000.
Related posts:
Apple wins $1bn in US while Samsung wins in Korea; it may reshape the free Google Android system
US launches financial attacks against its allies! 
Put an end to patent battle
