Intangible Asset Market Value Study
Within the last quarter century, intellectual capital has emerged as the leading asset class. The term “intellectual capital” refers generally to traditional Intellectual Property assets – patents, trademarks and copyrights. At Ocean Tomo, we uniquely include within the definition of “intellectual capital” special client intangible assets, especially corporate and government preference rights.
Between 1995 and 2015, the share of intangible asset market value increased from 68% to 84%. In July, Ocean Tomo updated the IAMV Study to investigate the economic effects of the novel coronavirus. We find that COVID-19 has accelerated the trend of increasing IAMV share, with intangible assets now commanding over 90% of the S&P500 market value. The growth in the value of Intellectual Capital Equity® can be seen when evaluating the market capitalization of the S&P 500 as shown in the chart below.
This trend holds for the S&P Europe 350 index as well, albeit to a lesser extent, with an increase from 71% in 2015 to 74% in 2020.
Given that the coronavirus has affected all countries to some extent, Ocean Tomo also investigated the effects COVID-19 has had on Asian market values. We find that, in China, Japan, and South Korea, COVID-19 has resulted in a decline in IAMV share in the Shanghai Shenzen CSI 300, the Nikkei 225, and KOSDAQ Composite Index, respectively.
While part of this is explained by reporting differences and higher volatility compared to the S&P500 IAMV, South Korea has also been notably lauded for its success in controlling the outbreak within its borders, while never fully locking down. The economic effects associated with its more successful pandemic response than its regional (and global) neighbors could have had more severe consequences for intangible asset values.
Intangible assets are now responsible for 90% of all business value. Download the Ocean Tomo Study of Intangible Asset Market Value.