The Financial Times' Top 500: This Year's Global Shuffle

Last year both Ford (F) and 1970s tech phenom Xerox (XRX) dropped out of the rankings of the top 500 global companies in the world, according to the Financial Times [FT] Global 500. And who would have thought 20 years ago that General Motors (GM) -- remember "What's good for General Motors is good for America"? -- wouldn't even make it into the Global 500? This reflects the dynamic nature of the FT Global 500, which every year ranks publicly traded companies across the globe by market capitalization.

The Global Shuffle: The Changing Face of the Global Economy

Twenty years ago, Japanese companies were set to dominate the global economic scene in the 21st century. No one could have predicted that 20 years later, the then-Communist Soviet Union and still Communist China would boast companies that rank among the top 10 companies in the world. Russian natural gas giant Gazprom (OGZPY.PK) made headlines last year when its market value briefly exceeded that of British Petroleum (BP). A year later, Gazprom has overtaken BP and it isn't even close. Gazprom this year leapfrogged its British rival, going from #10 to #6. BP dropped out of the top 10 altogether. Gazprom today is the largest non-U.S. company in the world.

Even more impressive has been the rise of China. A year ago, China only had one company among the top 100 -- China Mobile (CHL) at #38. But the Chinese mega IPOs of 2006 had their impact. Today, not only has China Mobile cracked the top 20 at #16, but it has also been leapfrogged by Chinese banking giant ICBC, which broke straight into the top 10 at #9. China had a total of six companies in the top 500 last year. This year, China boasts an additional five companies in the top 100 alone -- ICBC (#9), Bank of China (#23), China Construction Bank (#35), China Life (#41), and Sinopec (#53).

The Global Shuffle: The Commodities Boom Continues

Natural resources continued to make a strong showing in the global rankings. For the second year in a row, Exxon (XOM) is ranked #1, displacing reigning champions GE (GE) and Microsoft (MSFT). Measured by turnover, the rankings are even more skewed: the top three companies are Exxon, Royal Dutch Shell (RDS.A), and BP (BP) -- generating $365 billion, $319 billion, and $265 billion in revenues, respectively. The only non-oil company in this league is Wal-Mart, with revenues of $345 billion.

Diversified commodities giants cemented their positions in the rankings as well -- although their surge in the rankings ebbed slightly. BHP Billiton (BHP) stayed steady at #33, while Rio Tinto (RTP) actually fell from #61 to #73. Brazilian giant Vale do Rio Doce (RIO) was a big winner and jumped from #117 to #74. Anglo American (AAUK) also broke into the top 100 (#88) for the first time.

The Global Shuffle: Technology Redux

Global technology -- the darling of the world a decade ago -- has yet to recover from the dotcom bust. Microsoft, ranked #3, is the only tech company in the top 20. Cisco (CSCO) may have jumped almost 30% to around $27 over the last 12 months -- but it's still a long way from $80. Remember in 2000 when Cisco was briefly worth more than Microsoft? Today, this Silicon Valley giant doesn't crack the top 25. Technology icons IBM (IBM) and Intel (INTC) continue their descent in the rankings, along with South Korean giant Samsung, which dropped from #35 to #56. Dell (DELL) dropped out of the top 100 altogether and Ebay (EBAY) is lucky to crack the top 200.

Google (GOOG) is the big exception. It rose from #392 in 2005 to #60 in 2006 and to #51 in 2007. However, with all of the press it's getting you'd think Google would have been higher. For investors, there were better opportunities around. Apple (AAPL) broke back into the top 100 by moving from #124 to #85. The most impressive rebound was Amazon (AMZN), with a remarkable stock performance that returned it to the Global Top 500 after its ignominious demotion from the list in 2006.

The Global Shuffle: The Past Does Not Equal the Future -- Except in the United States

This week, Britain's Economist has a story about why the United States is "Still No.1." Looking at the FT list, you wonder why it was ever a question. U.S. companies are doing just fine, thank you. The top five global companies are in the United States -- Exxon Mobil, GE, Microsoft, Citigroup and new arrival AT&T. In addition, American companies account for 22 out of the world's top 50, and 49 out of the top 100. To put that in perspective, the United States has more companies in the global top 100 than China, Japan, Russia, France, Germany, and the United Kingdom combined. Throw in Brazil and Switzerland for good measure -- and you still can't match Uncle Sam.

Royal Dutch Shell, ranked #10, is tops among companies from Old Europe. France's highest-ranking company is oil giant Total (TOT) at #22. Overall, only six other French companies break into the top 100. Germany fares even worse, with four companies in the top 100. That's the same number as tiny Switzerland.

Fifteen years ago, the ranks of the world's most valuable companies included several Japanese firms. Today, only one Japanese company cracks the Top Ten -- Toyota Motors (TM) at #7. Otherwise, Japan's share of the world's top companies has faded. Mitsubishi UFJ (MTU), the world's largest bank by assets, leapt 64 places from #82 to #18 in 2006 but dropped back to #38 in 2007. The same was true of four of the six other Japanese companies in the global top 100. China's surge means it has about as many companies in the top 100 (five) as does Japan (six). China already leads in terms of combined market cap.

What about the fast-growth BRIC economies? Anointed as the future powerhouses of the global economy, BRIC countries only boast a handful of companies in the top 100 -- five for China, two for Brazil, three for Russia, and zero for India. Take away their natural resources, and Brazil and Russia would be left with nothing. Without Chinese banks, the BRICs would disappear from the top 100 altogether.

What is the bottom line? The shuffling in the ranks of the FT's annual list reflects the dynamic nature of the global economies. That change spells enormous opportunity for investors. And today that opportunity is on a global stage.