Wal-Mart valued as world’s fourth-largest company

Wal-Mart Stores Inc. has replaced ICBC – the world’s largest bank – as the world’s fourth-largest company, valued at $242.1 billion. The retailer is up 21% this year as its low prices boosted sales for 13 consecutive quarters.

American companies are supplanting China from the world’s 500 biggest stocks faster than at any time in the past decade, as an improving U.S. economy and investor confidence in free markets overcomes the lure of equities offering twice the profit growth.

U.S. corporations led by Apple Inc. and Exxon Mobil Corp. make up 171 of the top 500 with a market capitalization of $10.6 trillion, or 40.3% of the total, compared with 159 valued at $8.24 trillion in 2009, data compiled by Bloomberg show. PetroChina Co. and Industrial & Commercial Bank of China Ltd. lead the 24 Chinese firms worth $1.74 trillion qualifying today (Dec. 3), down from 34 with a capitalization of $2.19 trillion.

Apple, which approached bankruptcy in 1997, is ranked No. 1 with a market capitalization of $550.6 billion. Shares of the Cupertino, Calif.-based company climbed from the 12th spot in 2009 after surging sales of iPhones and iPad computers drove the stock up 193 % over the past three years.

Exxon, based in Irving, Texas, reclaimed its title as the world’s largest energy company and the second-largest overall company, with a market value of $401.9 billion. The stock has advanced 29 percent since the end of 2009 as the company boosted dividends for 30 straight years and spent $22.1 billion repurchasing stock in 2011.

PetroChina, the world’s biggest company in 2009, has slipped to third with a market capitalization of $248.5 billion. The Beijing-based energy producer reported its lowest third-quarter profit in at least five years on Oct. 30 because of refining losses and natural-gas import costs. PetroChina, 86% owned by the government, incurred losses on refining as the state kept retail fuel prices low to fight inflation.

CHINA DECLINE
China’s share of the world’s biggest companies diminished even though its government-directed economy has continued to expand while the U.S. and Europe showed anemic growth during the past four years. While the Standard & Poor’s 500 Index doubled since reaching a 12-year low in March 2009, the Shanghai Composite Index fell 6.5% on concern state ownership of business means investors aren’t the first priority. Valuations for Chinese companies declined to half of those in the U.S.

“The discount in valuation is reflective of not having very specific private-property laws in China,” said Wayne Lin, a money manager at Baltimore-based Legg Mason Inc. His firm oversees $646 billion. “There’s no guarantee that what the company owns, the company will be able to keep in the long run. The U.S. is in a better position.”

Economic expansion that was three times faster in China failed to keep America’s proportion among the biggest companies from expanding as investors sought the relative safety of U.S. stocks. While the world’s most populous country boosted gross domestic product by 62% from 2009 to 2011 and passed Japan to become the No. 2 economy, its share of the top 500 fell to 6.6 % from 9.3%, the biggest drop over the comparable period since Bloomberg data began in 2002.

Earnings from the largest companies in China increased by sevenfold on average over the past three years, more than double the rate for American corporations, according to data compiled by Bloomberg.

“It’s still not clear if those companies in China have full discretion to maximize profits,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $170 billion, said in a Nov. 27 telephone interview. “There’s no doubt that the U.S. is an area that people go for safety. In a global crisis, the U.S. is probably going to fix itself first.”

‘SELF-INFLICTED’ SLOWDOWN
ICBC ceded its No. 4 spot in 2009 and dropped to eighth place in the 500 ranking this year, valued at $222.2 billion, amid concern loans extended to local governments and developers won’t be repaid. The Beijing-based company is still the world’s largest bank by market value, topping HSBC Holdings Plc by 18% and Wells Fargo & Co. by 28%.

American companies entering the ranking included an online travel agent and a social network operator: Priceline.com Inc. and Facebook Inc. Services make up 80% of the U.S. economy, Commerce Department data show.

Computer and software companies are biggest industry among the largest American stocks, accounting for 21%.

The diverging path in the world ranking reflects the approach of central bankers in China and the U.S., said Nicholas Yeo, head of China and Hong Kong equities at Aberdeen Asset Management Plc, which oversees $302.4 billion globally.

The Federal Reserve has announced unprecedented bond purchases and kept interest rates at near zero since 2008 to boost the economy. Fed Chairman Ben S. Bernanke pledged in September that the central bank will buy $40 billion of mortgage securities a month until the U.S. labor market recovers.

The People’s Bank of China raised its benchmark interest rate five times in 2010 and 2011 before cutting twice this year. The central bank increased the amount banks are required to hold in reserve 12 times in 2010 and 2011, and announced three reductions since November last year.

“The slowdown in China is self-inflicted,” Yeo said in a phone interview in Hong Kong on Nov. 26. “The U.S. market has recovered and done pretty well this year because of incipient signs of recovery.”