SHANGHAI: The value of China’s top companies has plunged by more than 50% in two years on the back of weak markets and a crackdown on the tech and property sectors, according to a new global ranking.
The report by the Shanghai-based Hurun Research Institute also found that the value of 500 companies on its global list tumbled 19% to US$47 trillion in the same period, with some 340 groups declining or staying flat.
“The hardest-hit sector was retail, especially e-commerce, on the back of soaring inflation, which in turn dragged down payments and delivery companies,” said Rupert Hoogewerf, Hurun’s chairman and chief researcher.
The 35 Chinese companies in Hurun’s ranking suffered their steepest fall since the annual list’s inaugural edition in 2020, with a 52% drop in value to US$2.36 trillion. Tech giants Tencent and Alibaba Group Holding fell off the top 10 list of most valuable companies to the 26th and 48th spots, respectively.
Tencent, the operator of the popular messaging app WeChat and the online game Honor of Kings, saw its value shaved off by a whopping US$432 billion to now be US$265 billion, while Alibaba lost US$415 billion to US$171 billion, according to Hurun.
In recent years, China launched a crackdown on its booming tech sector, while the government also moved to restrict highly leveraged property developers’ access to financing. Since then, China’s key real estate sector has seen a wave of bond defaults by debt-swamped developers, triggering a sell-off in their shares.
Real estate companies on Hurun’s list lost 35% of their value compared to last year as soaring mortgage rates, a weak economy and limp buyer demand took a toll.
“This concentration of economic power has gained the attention of the Chinese government, which has reacted with reforms hitting e-commerce platforms and real estate stocks hardest,” Hoogewerf said.
Listed companies were ranked based on their market capitalization, with an Oct 26 cutoff date. For nonlisted companies, values were calculated by comparing them to listed peers or were based on their most recent financing.
Among the newcomers on this year’s list were Chinese fast-fashion brand Shein, valued at US$40 billion, and WeBank, a digital lender backed by Tencent that has a US$33 billion market cap.
Short video-sharing platform Kuaishou, which was the highest-valued newcomer last year, fell off the most recent Hurun list amid China’s regulatory offensive, along with drugmaker WuXi Biologics.
Led by iPhone maker Apple, US companies topped the rankings with a US$30.4 trillion valuation and dominated the list of top 15 highest-valued companies. American groups also accounted for more than half of the list’s 500 groups.
South Korea’s Samsung, with a US$322 billion valuation, took 16th place, followed by Taiwan Semiconductor Manufacturing Co with a value of US$317 billion.
Japan was ranked third by country, after the US and China.
Ranking based on valuation is a better measurement of a company’s performance because it takes into account current and future potential, unlike the more-established Fortune 500, which ranks companies based on revenue, Hoogeweft said.
Hurun’s list also excludes state-controlled companies, many of which are valuation heavyweights by virtue of their backers.