More On: Chinese companies
Chinese companies are no longer among the world's top 10 by market capitalization
Under pressure from both Beijing and Washington, Chinese enterprises are losing value.
According to fresh statistics, Tencent Holdings and Alibaba Group Holdings have tumbled out of the world top ten firms in terms of market valuation, leaving the list without any Chinese companies.
According to the QUICK-FactSet database, Tencent was rated seventh by the end of 2020, while Alibaba was ranked ninth. Tencent's market valuation dropped by over 40% after it peaked at sixth place in February. As of Friday, it was in 11th position.
This latest ranking is dominated by American tech behemoths. The top three companies are Apple, Microsoft, and Alphabet, the parent company of Google. Fourth place goes to Saudi Aramco, which is followed by Amazon.com, Tesla, and Facebook operator Meta. Nvidia, the chipmaker, is ranked eighth, while Warren Buffet's Berkshire Hathaway is ranked ninth.
As a result, Taiwan Semiconductor Manufacturing Co. is the most valuable Asian corporation in the world, ranking No. 10.
In 2007, the Shanghai Composite Index reached an all-time high, fueled by optimism in the Chinese economy. Four of the top ten firms by market capitalization were Chinese at the time, with PetroChina at the top.
The emergence of Chinese technology businesses in the aftermath of the global financial crisis was fueled by innovative business strategies and access to a vast market. However, the government's crackdown on the IT industry, as well as tensions with the United States, have turned those fortunes around.
Didi Global, the firm behind China's largest ride-hailing app, delisted from the New York Stock Exchange on December 3 after only five months on the market. For fear of foreign authorities gaining access to sensitive data, the Chinese government has strengthened inspection of firms that list outside.
The government of US President Joe Biden, on the other hand, has increased pressure on Chinese enterprises. It imposed penalties on DJI, a drone manufacturer, and hundreds of other Chinese companies suspected of human rights violations or military development on Thursday.
In effect, the actions prevent Americans from investing in some of them and put a de facto trade ban on the others.
The forecast for Chinese stocks will be determined by "how serious the US is about preventing the flow of cash into China," according to Toru Nishihama, head economist of the Dai-ichi Life Research Institute's Economic Research Department.
