Equity Makes The World Go 'Round

With stock increasingly the medium of exchange among the international corporate elite, it's no wonder that BUSINESS WEEK's Global 1000 is driven by the strength of equity markets around the world. Certainly, currencies play a significant role, but the shifts this year were largely determined by surging U.S. and European markets, the wave of Continental restructurings, and the mergers and acquisitions taking place on both sides of the Atlantic. It is no accident that the Daimler Benz merger with Chrysler Corp. was paid for in stock.

Ranking some 2,700 companies in 22 countries by market capitalization in dollar terms, the BUSINESS WEEK 1000 had some interesting surprises. American and European companies clearly dominate the list. Surfing the double wave of the Dow and the dollar, U.S. companies saw their value jump 37% as a group in the year ended on May 31. They now account for nearly half of the world's leading companies, 480, up 33 from last year. European companies did even better. They make up nearly one-third of the list, 350 companies, up by 54. The market value of German companies rose by 42%, and French companies jumped a sharp 60%.

The big losers, of course, are Asian companies, suffering from the double blow of declining stock markets and depreciating currencies. Japanese companies saw their market cap shrink by 23% in dollar terms, 8% in yen. Some 66 Japanese companies fell off the 1000 list. Some 116 survived. This compares with 115 for Britain, a rise of 20.

Even though many Japanese companies are extremely cheap by any measure, there were few acquisitions by American or European companies (one exception being Merrill Lynch & Co.'s purchase of 33 branch offices of failing Yamaichi Securities Co.).

For corporations operating everywhere else in the world, market cap is king.

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