CONCLUSION
The inexorable trend toward integration of the world’s economies and
markets will certainly continue in this new millennium. No country will
be able to dominate every market, and industry leaders are apt to
emerge from any place on the globe. The globalization of the world
economy means that the strength of management, product lines, and
marketing will be far more important factors in achieving success than
where the firm is domiciled.
Sticking only to U.S. equities is a risky strategy for investors. No ad-
visor would recommend investing only in those stocks whose name be-
gins with the letter A. But sticking only to U.S. equities would be just
such a bet since U.S.-based equity will likely shrink to less than 18 per-
cent of the world market by midcentury. And equity in China and India
will grow to more than one-third of the world’s equity market and be
twice the size of the United States. Only those investors who have a fully
diversified world portfolio will be able to reap the best returns with the
lowest risk.
APPENDIX: THE LARGEST NON-U.S.-BASED COMPANIES
Table 10-5 lists the top 20 U.S. and non-U.S. companies by total market
value, based on allshares outstanding (not float adjusted, whether par-
tially owned by the government or not).
- PetroChina (China)
PetroChina is a subsidiary of the state-owned China National Petro-
leum Corporation, and it produces two-thirds of China’s oil and gas.
The company has 11.5 billion barrels of oil reserves and has interests
in over 15,900 gas stations. PetroChina was created in 2000 to manage
China’s domestic petroleum production. As of October 2007, its mar-
ket value has soared to $438 billion, second in the world to Exxon
Mobil.
- OAO Gazprom (Russia)
Gazprom, Russia’s largest company, is an oil and gas giant that controls
25 percent of the world oil reserves. Its revenues account for 25 percent
of the Russian government’s tax revenues. Initially a state-owned natu-
ral gas monopoly, Gazprom was converted into a joint-stock company in
182 PART 2 Valuation, Style Investing, and Global Markets