The S&P/ASX 200 Index (ASX: XJO) hasn’t changed significantly over the last seven years. The largest businesses are still the ASX bank shares and BHP Group Ltd (ASX: BHP), along with CSL Ltd (ASX: CSL).
While some of these names could remain, I think there could be some changes over the next seven years.
Here are my predictions on which ASX 200 shares will have the biggest market capitalisations by 2030.
BHP
BHP currently has a market capitalisation of $232 billion, according to the ASX. The ASX mining share is by far the biggest business on the ASX.
While long-term iron ore earnings are somewhat uncertain with fluctuating Chinese demand, I believe the divisions of copper, nickel, potash, and perhaps other decarbonisation commodities will help to contribute enough profit in the future for it to remain one of the biggest companies by 2030.
As well, by the end of this decade, the company’s Jansen potash project — in Canada — will be fully operational.
CSL
CSL is by far the biggestASX healthcare share, with a market capitalisation of $128 billion according to the ASX. The business has grown significantly during the last decade, but I think there are a number of tailwinds to enable it to generate stronger profit growth than most of the other large ASX blue chip shares over the next seven years.
There’s the ageing demographics, the willingness of many governments and individuals to spend on healthcare, the ASX 200 share’s strong commitment to spending billions on research and development to unlock new earnings streams, and the company’s willingness to make bolt-on acquisitions.
Commonwealth Bank of Australia (ASX: CBA)
CBA is, by far, the largest domestic ASX bank share, and I can’t see that changing over the next seven years. It currently has a market capitalisation of $175 billion according to the ASX.
Even if its market capitalisation doesn’t change over the next seven years, I’d guess that would still be enough to make it one of the three biggest ASX 200 shres.
Macquarie Group Ltd (ASX: MQG)
This is where I think the list is going to start changing. While Macquarie isn’t currently the fourth largest business right now, there’s not much of a gap between the global investment bank and the other major ASX bank shares. Macquarie has a starting market capitalisation of $67 billion. I think it can catch up.
The business has shown a strong capability of delivering long-term earnings growth, being effective at knowing where to invest globally, and achieving a stronger return on equity (ROE) than other banks. By having a lower dividend payout ratio, it can also e-invest more of its profit each year than other banks. Over seven years, I think Macquarie can catch up and overtake the other banks.
Wesfarmers Ltd (ASX: WES)
My choice for fifth place is Wesfarmers, which currently has a market capitalisation of $57 billion. It may be tough to overtake National Australia Bank Ltd (ASX: NAB), which is currently the second-largest bank, but I believe Wsfarmers can do it.
The banking sector is very competitive which could challenge current profitability and limit future growth. Wesfarmers’ businesses like Bunnings and Kmart have more growth levers in my opinion, such as being able to open new stores and grow online sales, and they have stronger returns on capital.
I also think that Wesfarmers’ other businesses can significantly grow profit for the company, such as the lithium project Mt Holland and its healthcare segment. The ASX 200 share is unlocking new platforms for growth, which should help drive its future market capitalisation.
Any other contenders?
Looking at where the market capitalisations are now, and future growth plans, I’d guess Fortescue Metals Group Ltd (ASX: FMG) has the best chance of potentially making the top five because of its green energy plans.
It’s working on a global list of potential projects where it can make green hydrogen and green ammonia. The business also wants to become an important high-performace battery player. By 2030, the business has a goal of producing 15mt of green hydrogen.
By 2030, it may have told the market about its plans for even more growth in the 2030s, so the 2030 market capitalisation may take that future growth into account. I’m just not sure where the iron ore side of the business will be in seven years, so I left it out of my top five list.
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