Home Business News Value of global intangible assets regains some ground after sharp decline

Value of global intangible assets regains some ground after sharp decline

by LLB Finance Reporter
1st Nov 23 12:34 pm

The value of intangible assets owned by the world’s largest companies has risen by 8%, according to a new report published by Brand Finance, the world’s leading brand and intangible asset valuation consultancy.

The new analysis has found that global intangible value has increased by 8% from USD57.3 trillion in 2022 to USD61.9 trillion in 2023. This figure is significant; almost 3x the value of the GDP of the United States. During the same period, the value of global tangible net assets remains stable.

Every year, the Brand Finance Global Intangible Finance Tracker (GIFT™) report tracks the value of the world’s largest companies by intangible asset value. Intangible assets are identifiable, non-monetary assets without physical substance.

Intangible assets can be grouped into three broad categories – rights (including leases, agreements, contracts), relationships (including a trained workforce), and intellectual property (including brands, patents, copyrights).

We reported a 25% loss to global intangible value in our 2022 edition of the GIFT report, as big tech firms began to make significant layoffs and investor sentiment waned. This year’s recovery in intangible asset value returns to the healthy trend seen since 2012 and therefore reflects the continued growing importance of intangible assets in the global economy today.

Annie Brown, General Manager at Brand Finance UK, said, “Brand Finance’s latest data shows that the rate of global intangible value growth has returned to a more positive trajectory as the global economy stabilises and investor confidence is cautiously restored.

“Our research aims to demonstrate the continued growing importance of intangible assets like strong brands and innovative technology in driving productivity and growth potential. Companies that strategically deploy their intangible assets have the ability to significantly outperform their competitors.”

Apple retains top spot as world’s most intangible company, while Microsoft rebounds from behind Aramco to take second place

Apple (intangible assets up 17% to USD2.7 trillion) maintains its lead as the company with the highest intangible value, increasing by USD384 billion since 2022. Microsoft (intangible assets up 46% to USD2.3 trillion) has rebound from behind Aramco (intangible assets up 4% to USD1.8 trillion) to take second place.

American tech giant Alphabet (intangible assets up 68% to USD1.4 trillion) has surpassed Amazon (intangible assets up 40% to USD1.2 trillion) to take fifth position, while Tesla (intangible assets up 15% to USD776 billion) remains in sixth place. A significant standout is Meta, (intangible assets up 435% to USD707 billion) which has increased its position by 61 ranks to seventh place, following restructuring and the renaming of the company from Facebook to Meta.

Tobacco & E-Cigarette sector stands out for intangible gains

This year’s most intangible sector in relative terms (91% of total enterprise value) is Tobacco & E-Cigarettes, as companies invest heavily in proprietary technology and patented intellectual property around vaping devices to drive growth.

Three major companies have accumulated significant disclosed intangibles and goodwill due to large acquisitions: China National Tobacco Corporation, BAT, and Philip Morris. While tobacco products are increasingly regulated in developed markets, e-cigarettes are at nascent stage and currently proving to generate high intangible value thanks in part due to lack of regulation of marketing these products in some jurisdictions.

Intangible asset value rises for transforming industries like Commercial Services (up 68%) Media (up 309%) and Insurance (up 81%)

The increase in intangible asset value for the Commercial Services sector this year can be attributed to companies actively incorporating innovative technologies like AI into their service offerings. Further, the Media sector is increasingly driven by social media megafirms such as Meta, which itself went through significant restructuring this past year, mostly driven by cost-cutting but also with the underlying motive of promoting the Metaverse to “build the future of human connection”.

Insurance firms are transforming both their capacity and readiness to provide a financial safety net against the increasing volume and impact of climate-related and cyber-risks.

USA shows largest absolute increase in intangible asset value

The US has seen a USD836 billion increase in intangible asset value from 2022, highlighting partial recovery from its USD4.9 trillion drop last year, giving it the largest absolute increase as a country.

Behind the USA, Japan is the market with the second biggest increase in intangible asset value, up USD587 billion. This increase can be attributed to the significant growth of the Tobacco & E-Cigarette and Semiconductor industries, which now rank as the primary and secondary contributors to Japan’s intangible value percentage.

2023 ranking features new analysis of intangible value according to stock exchange

This year, Brand Finance has analysed results according to stock exchange in its assessment of global intangible value for the first time. The New York Stock Exchange (NYSE) ranks as the world’s largest stock exchange by intangible value, valued at USD2.5 trillion.

However, OTCQB Venture Market, an over the counter (OTC) securities exchange platform, is the most intangible stock exchange overall in relative terms. The highly intangible nature of securities platforms explains OTCQB’s high 78% intangibility percentage.

The London Stock Exchange (LSE) also ranks in the top 25 most intangible stock exchanges this year. Looking ahead, the UK is well poised to create a more welcoming landscape for tech and innovation companies, bringing with it heightened investor appetite.

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