Top 10 Largest Australian Companies by market capitalisation
The powerhouse mining and financial services industries dominate the ASX, just as they do the Australian economy. However, a couple of other household names, as well as biotech market-darling, also manage to make the grade.
What are the largest companies in Australia by market capitalisation?
Gazing upon a list of Australia’s 10 largest publicly listed companies by market capitalisation provides a succinct insight into the structure of the Australian economy. The major mining companies, who’ve for years benefitted the Chinese economic boom, and the Big-4 banks, who’ve enjoyed many of the spoils of several property booms, occupy 6 out of the 10 spots on the list, and 4 out of the top 5.
More broadly, Financial Services companies make up 28.1% of the ASX200, while Basic Materials make up 20.1%. Healthcare is the next highest concentration, making up 9.9% of the benchmark.
It’s certainly a dense concentration of value. And while it’s true that the overall fortunes of the Australian economy and ASX are leveraged significantly to the fate of the miners and banks, for investors and traders interested in entering the Australian share market, it is far from the full story. Conveying the changing face of the Australian economy, global investment bank Macquarie Group holds its weight amongst its financial services cousins, biotechnology firm CSL is a growth-investor favourite, and retail giants Woolworths and Wesfarmers are perennial investor staples. Other stocks, such as Afterpay, while not in the top ten, are catching up fast. Afterpay is currently the 14th largest publicly listed company in Australia – an impressive feat given that it was founded just seven years ago.
Top 10 largest Australian companies
Below you can find a list with the ten largest Australian companies on the ASX by market capitalisation. The list is accurate at the time of writing. The list of the largest companies in Australia can change due to normal stock market fluctuations.
Commonwealth Bank of Australia (CBA)
At present, the Commonwealth Bank of Australia is largest company currently on the ASX and biggest of Australia’s Big 4 Banks. Best known as Australia’s premier retail bank, the CBA is Australia’s largest residential lender. Valued at over $150 billion, despite the coronavirus pandemic weighing heavily on the financial sector, CBA proved resilient, retaining a strong capital position, handing down an interim FY21 dividend of $1.50 per share and seeing volume growth across its core lending portfolios.
BHP Group (BHP)
At present, BHP Group is the second largest company on the ASX. Boasting a market capitalisation of nearly $134 billion, BHP is a global mining giant, specialising in the exploration and production of commodities such as coal, gold, copper, and iron ore, as well the exploration and refinement of petroleum. A dually listed firm, but with its Australian headquarters based in Melbourne, BHP delivered as part of its most recent interim results, the miner reported revenue of US$25,639 million (+15%) and profits of US$3,876 (-20%).
CSL Limited (CSL)
CSL is a leader in Australia’s biotechnology industry. Valued by market capitalisation at $116 billion, the company develops, manufactures and markets human pharmaceutical and diagnostic products made from human plasma. Despite experiencing some share price weakness in recent times, CSL continues to trade at an above-market PE ratio of 34x, suggesting that growth expectations remain elevated. As part of its FY21 interim results, CSL reported net profit after tax of US$1,810 million (+44%), EPS of US$3.98 and an interim dividend of US$1.04 per share (+9%).
Westpac Banking Group (WBC)
Australia’s second largest bank by market capitalisation, Westpac provides commercial banking services to individuals, businesses, corporations and institutions both domestically and abroad. Australia’s oldest bank, established in 1817 as the Bank of New South Wales, Westpac is one of two of Australia’s Big 4 Banks headquartered in Sydney. As part of the bank's most recent first quarter update, WBC reported statutory net profits of $1.70 billion against unaudited cash earnings of $1.9 billion. As part of thos results, Westpac reported a net interest margin of 2.06% and a CET1 ratio of 11.9%.
National Australia Bank (NAB)
The third largest of Australia’s Big 4 banks, the National Australia Bank is valued at $86 billion by market capitalisation. Considered Australia’s 'business bank', NAB derives most its revenue from domestic operations. The NAB is one of two of Australia’s Big 4 based in Melbourne, the other being the ANZ. With the coronavirus pandemic hurting financial stocks across the board and regulators putting more scrutiny on payouts, NAB’s dividend yield currently stands at 2.28%.
ANZ Banking Group (ANZ)
The smallest of the big four banks, ANZ positions itself as Australia’s bank with reach throughout the Asian region. An institution with a global mindset, the ANZ derives a significant portion of its revenue from its institutional service offering. Of course, it also specialises in areas from depositary banking, mortgage lending and general finance. As with many other Australian banks, the last year has proven to be challenging for ANZ, with low interest rates putting pressure on margins and regulators placing heavier scrutiny on dividends. ANZ’s dividend yield currently stands at 2.11%.
Fortescue Metals Group (FMG)
Fortescue Metals Group has been a significant benefactor of the monumental run up in iron ore prices over the last year, seeing its revenues and earnings surge in response. At the time of writing iron ore stood at a multi-year high, trading at US$168 per tonne. It has also attracted a lot of attention from investors, with Fortescue now boasting a market capitalisation of around $62.5 billion. Unlike many of the banks which have seen their dividend payouts impact as a result of the pandemic, Fortescue has moved from strength to strength, consistently upping their payouts. The miner most recently paid an interim dividend of A$1.47 per share, some 93% higher than the dividend from the prior corresponding period.
The eight largest company on the ASX, with a market capitalisation of $57 billion, is Perth’s Wesfarmers Ltd. A key Australian conglomerate, Westfarmers focuses on several different commercial areas, Wesfarmers owns retail chains, operates mines, writes insurance, produces industrial products and distributes liquefied petroleum, amongst other activities. For income focused investors, Wesfarmers dividend has proven resilient over the last year. The company currently boasts an annual yield of 3.60%.
Macquarie Group is Australia’s largest investment banking firm, with a significant international presence. Affectionately known as the 'millionaire’s factory', shareholders themselves have shared in the benefits of a growing Australian corporate giant. Since we first published this article Macquarie has seen its market capitalisation balloon by ~$15 billion – last sitting at $54.7 billion. Despite its market value rising, the financial firm, like many others in the space has seen its profitability decline in recent times. In November 2020, Macquarie reported first-half net profits of AUD$985 million, representing a 32% decline on the prior corresponding period.
Woolworths Group (WOW)
Australia’s number one food retailer, Woolworths Group specialises in the operation of supermarkets and general consumer stores, along with engaging in the procurement of food, liquor and other products. The company also has interests in other consumer goods and services, ranging from pubs, accommodation and gaming operations. Valued by market capitalisation at nearly $50 billion, Woolworths is considered by investors as one of the ASX’s 'defensive' consumer staples sector stocks. Woolworths current dividend yield stands at 2.56%.
How to trade the largest companies in Australia
Trading Australia’s large cap shares can provide a trader with the ability to benefit from changes in the share price of some of nation’s biggest corporate names. Moreover, share CFDs allows a trader to gain exposure to movements in Australia’s largest companies, while not owning the underlying stock. Companies with large market capitalisation are generally much more liquid than smaller, more volatile stocks, meaning relatively lower risks for traders wishing to trade in the equity market.
Developing a trading strategy is very important before jumping in to trading shares or share CFDs. One part of this process is gaining an appreciation of what makes the price of a stock move. Some traders prefer to trade 'top down' by looking at broader macroeconomic themes and applying them to certain industries, and then particular stocks within that industry. Others take a 'bottom up' approach by analysing a company’s fundamentals, to determine whether the current market price properly reflects future earnings.
Trading Australia’s top 10 companies by market capitalisation affords amply opportunity to benefit from changes in the Australian corporate and economic environment. Whatever the approach taken, trading shares is generally considered to be riskier than when trading a currency, index, or major commodity market. Of course, this means the potential for higher returns, but an adequate risk management strategy ought to be implemented by a trader to protect their capital.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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