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Chart: The Downfall of Canada’s Largest Alternative Mortgage Lender

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Chart: The Downfall of Canada's Largest Alternative Mortgage Lender

The Downfall of Home Capital

And what it could mean to global investors

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

If history does indeed rhyme, then the saga of Canada’s largest alternative mortgage lender could be the opening act in a Shakespearean financial tragedy.

Home Capital Group, the country’s leader in subprime residential loans, is finally on the ropes after years of speculation. The company was the most-shorted stock in Canada at various points in 2015, and it also took the crown as the most-shorted stock in North America for durations of 2016.

Those bears are likely buying the drinks this weekend. Home Capital’s stock has fallen 89% from its peak in August 2014, and over that time the company has shed over $3.4 billion of market capitalization. The biggest portion of the fall came just weeks ago, when depositors withdrew nearly $600 million in cash from Home Capital Group’s balance sheet.

In more recent news: the company has also had its credit rating downgraded, opened an emergency credit facility of $2 billion with sky-high interest rates, and shook up its board as part of a “governance renewal”. Oh, and all of this is happening while regulators pursue allegations that the company intentionally misled investors.

Part of a Bigger Narrative

It’s no secret that Canada’s housing and mortgage sector has been precarious for some time.

While the country’s banks and real estate sector largely shook off the effects of the Financial Crisis, the market has been bubbly and speculative since then. We previously noted the insanity of Vancouver’s real estate market, and even The Economist was calling Canada the most overvalued housing market in the world years ago.

Not much has changed. Governments have tried to step in with foreign buyer taxes, but it’s not enough to stop skyrocketing prices in Toronto. At the same time, Vancouver is also rebounding from recent government interventions to try and cool off the local market. In fact, prices there are up 5% in just three months.

While Home Capital Group is a relatively small fish in the Canadian mortgage pond, the saga has also prompted global investors to think deeper about Canadian housing. Are the issues with Home Capital a one-off, or are they systemic to the market as a whole? Is there a possibility of widespread contagion?

Gut Check Time

Markets are divided on the above issues for now. Some analysts are calling Home Capital a speculative buying opportunity, while others see it as a potential trigger for the puncture of the Canadian housing bubble.

Contagion has already been spreading, especially to other lenders such as Equitable Group – a company with a similar business model, that has seen shares fall 34% over the last month.

Home Capital contagion has spread to the entire mortgage market, in particular alternative mortgage lenders. Our channel checks suggest [Equitable Group’s] deposit-gathering capabilities will be impaired.

Jaeme Gloyn, National Bank (April 27th, 2017)

At the same time, house prices continue to increase – and governments are doing everything in their power to cool them off without triggering a recession. It’s a financial tightrope act that will be watched closely by investors around the world.

If the Home Capital saga is indeed just the opening act of a Shakespearean financial tragedy, then the following act will also be one to watch.

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The 50 Most Valuable Companies in the World in 2023

The world’s 50 most valuable companies represent over $25 trillion in market cap. We break this massive figure down by company and sector.

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The 50 Most Valuable Companies in the World

Market capitalization, or market cap, is one measure of a company’s value as determined by the stock market. It is easily calculated by multiplying the company’s outstanding shares by its current share price.

In this graphic, we present a treemap chart that visualizes the world’s top 50 publicly-traded companies by market cap, using data as of Aug. 16, 2023.

Editor’s note: While market capitalization is a simple way to compare publicly-traded companies, it does have some limitations. Most importantly, it does not include debt or cash in the calculation.

Data and Highlights

All of the data we used to create this graphic is included in the table below.

CompanySectorCountryMarket Cap
(USD billions)
AppleInformation Technology🇺🇸 US$2,777
MicrosoftInformation Technology🇺🇸 US$2,382
Saudi AramcoEnergy🇸🇦 Saudi Arabia$2,222
AlphabetCommunication Services🇺🇸 US$1,636
AmazonConsumer Discretionary🇺🇸 US$1,385
NVIDIAInformation Technology🇺🇸 US$1,074
Berkshire HathawayFinancials🇺🇸 US$774
Meta PlatformsCommunication Services🇺🇸 US$754
TeslaConsumer Discretionary🇺🇸 US$715
Eli LillyHealth Care🇺🇸 US$519
VisaInformation Technology🇺🇸 US$501
TSMCInformation Technology🇹🇼 Taiwan$476
UnitedHealthHealth Care🇺🇸 US$469
Johnson & JohnsonHealth Care🇺🇸 US$448
LVMHConsumer Discretionary🇫🇷 France$442
JPMorgan ChaseFinancials🇺🇸 US$436
Exxon MobilEnergy🇺🇸 US$430
WalmartConsumer Staples🇺🇸 US$429
Novo NordiskHealth Care🇩🇰 Denmark$418
TencentCommunication Services🇨🇳 China$389
MastercardInformation Technology🇺🇸 US$374
Procter & GambleConsumer Staples🇺🇸 US$361
BroadcomInformation Technology🇺🇸 US$344
SamsungInformation Technology🇰🇷 South Korea$341
Home DepotConsumer Discretionary🇺🇸 US$335
Kweichow MoutaiConsumer Staples🇨🇳 China$319
NestléConsumer Staples🇨🇭 Switzerland$319
OracleInformation Technology🇺🇸 US$313
ChevronEnergy🇺🇸 US$297
MerckHealth Care🇺🇸 US$276
AbbVieHealth Care🇺🇸 US$267
Coca-ColaConsumer Staples🇺🇸 US$262
ASMLInformation Technology🇳🇱 Netherlands$258
PepsicoConsumer Staples🇺🇸 US$249
CostcoConsumer Staples🇺🇸 US$248
L'OréalConsumer Discretionary🇫🇷 France$244
RocheHealth Care🇨🇭 Switzerland$241
International Holding CompanyFinancials🇦🇪 UAE$240
AdobeInformation Technology🇺🇸 US$235
Bank of AmericaFinancials🇺🇸 US$233
AlibabaConsumer Discretionary🇨🇳 China$228
HermèsConsumer Discretionary🇫🇷 France$227
ToyotaConsumer Discretionary🇯🇵 Japan$220
NovartisHealth Care🇨🇭 Switzerland$216
AstraZenecaHealth Care🇬🇧 UK$216
CiscoInformation Technology🇺🇸 US$216
Reliance IndustriesEnergy🇮🇳 India$213
McDonaldConsumer Discretionary🇺🇸 US$208
Thermo Fisher ScientificHealth Care🇺🇸 US$204
ShellEnergy🇬🇧 UK$204

From this data, we can see that there are only a handful of trillion dollar companies in the world, including Apple, Microsoft, Saudi Aramco, Amazon, Alphabet, and Nvidia.

Two former members of the trillion dollar club are Meta and Tesla, but both companies currently hover around the $700 billion range in terms of market capitalization. In 2022, Meta lost significant value as its earnings fell, while Tesla suffered from demand concerns.

Altogether, the 50 most valuable companies represent over $26.5 trillion in shareholder value. At a sector level, Information Technology is the most represented in the top 50, with $9.3 trillion in combined market cap. The next biggest sectors are Consumer Discretionary ($4.0 trillion) and Health Care ($3.3 trillion).

Geographical Breakdown

At a geographical level, the majority of the 50 most valuable companies are American. The following chart shows each country’s tally.

Most valuable companies by country

After the U.S., the three most represented countries are Switzerland, France, and China, with three companies apiece.

From Switzerland are companies such as Nestlé, Roche, and Novartis. The latter two are major players in the healthcare industry.

France’s companies in the top 50 list all belong to the Consumer Discretionary sector, and include fashion giants LVMH and Hermès, as well as L’Oréal, a global leader in cosmetics. Earlier this year, LVMH CEO Bernard Arnault was officially the richest person in the world with a fortune of $215 billion.

Finally, from the Chinese side are two globally-recognized names in Tencent and Alibaba. China’s third company on this list is Kweichow Moutai, a partially state-owned producer of alcoholic beverages.

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