With three in $3trn club, top trio account for nearly a fifth of US mcap

Saudi Arabia, Taiwan, France & UK other top markets where top firms hold big sway

With chipmaker Nvidia becoming the world’s most valuable company, the top-three listed firms in the US now account for almost a fifth of its market capitalisation (mcap).

While no other country even has a single firm with a market value of $2 trillion, the US boasts of three companies in the three-trillion-dollar club.

The three US-listed tech giants — Nvidia, Microsoft and Apple — have a total mcap of a staggering $10 trillion. They account for 17 per cent of America's mcap of $57 trillion and over 8 per cent of the global figure of $118 trillion.

Other developed markets such as France, Germany and the UK, too, have high dominance of their top-three firms — between 20 per cent and 28 per cent.

The top-three most valuable firms in France — Luxury goods maker LVMH, personal care major L'Oréal and luxury fashion brand Hermes — account for over a fourth of its market value.

Among the top 10 countries, Saudi Arabia and Taiwan have the highest reliance on their top companies.

With a market cap of nearly $1.8 trillion, Saudi Aramco alone accounts for two-thirds of Saudi’s mcap.

Meanwhile, global semiconductor giant Taiwan Semiconductor Manufacturing Corporation (TSMC) alone makes up for over 30 per cent of the Taiwanese market.

China, Hong Kong and Japan have the least reliance on the top firms, a sign that the market is more broad-based. India and Canada, too, have relatively low reliance on their top-three at 11 per cent each.

Experts believe low concentration of top firms or top sectors is a sign of healthy and more diverse markets.

“In case, the top sector or the stock underperforms, it can bog down the performance of the entire market. However, for the time being, the opposite is playing out in the US. A sharp rally in big tech and artificial intelligence (AI) stocks is leading to huge outperformance of the US markets,” said an analyst.

The tech-heavy Nasdaq Composite index has rallied over 20 per cent on a year-to-date basis. This was on the back of massive 2.8 times gains in Nvidia’s share price.

By comparison, the MSCI World Index is up a little over 10 per cent and the Nifty up 8 per cent.