Market capitalisation (or market cap for short) simply refers to a company’s share price multiplied by its total number of outstanding shares.
For example, Company ABC has a share price of $2 and an outstanding share count of 200 million. Therefore, its market capitalisation would be $400 million ($2 x 200 million).
Market cap measures the size of a company; so the higher a company’s market cap, the larger it is.
Companies are usually divided according to market capitalisation as follows:
- Large-cap companies ($10 billion or more);
- Mid-cap companies ($2 billion to $10 billion); and
- Small-cap companies ($300 million to $2 billion).
The following table shows the top 15 companies by market cap in Singapore (data as of 31 January 2020):
The above gives a flavour of the largest companies available for investors here.
Most of the companies also belong to the Straits Times Index.
One thing to note about market cap is that it’s not a valuation metric. A company with a larger market cap may not necessarily be more expensive than a smaller company.
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Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. Readers should always do their own due diligence and consider their financial goals before investing in any stock.