Inflation begins to bite for top 50 APAC firms

Capital markets were under intense pressure in the second quarter (Q2) of 2022 as foreign institutional investors indulged in heavy selloffs due to increased interest rates by the US Federal Reserve to curtail inflation and cool down the economy.

Against this backdrop, the aggregate market value of the top 50 Asia-Pacific (APAC) companies declined by 6% quarter-on-quarter (QoQ) in Q2 2022, finds GlobalData.

The top 50 list continues to be dominated by China with 29 companies, followed by Japan (seven), India (six), Australia (three), South Korea and Hong Kong (two each), and Taiwan (one).

Murthy Grandhi, Company Profiles analyst at GlobalData, said: “With more Chinese companies dominating the top 50 table, regulations such as an anti-monopoly law can mount pressure on Chinese technology companies, which will have a negative impact on their market value.

”Shallow economic recovery of the domestic demand and slower-than-expected easing of COVID-19 restrictions in China can create headwinds in Q3 2022.”

Mining giant BHP witnessed a QoQ slump of 26% in its market value. Grandhi, commented: “BHP’s share price has been plummeting due to the declining iron ore prices on account of weak demand in China, coupled with concerns of a global recession, impacting the commodity prices.”

Meanwhile, Indian IT major Infosys reported a 25.6% drop in its market cap over the previous quarter on the back of an anticipated decline in margins due to elevated attrition rates, which resulted in increasing manpower expenses.

The decline was also due to the tightening monetary policy in the US, which has been creating pressure on technology stocks such as Infosys as it generates 62% of revenue from North America region.