On an aggregate basis, 72 per cent of EM companies’ revenues come from their home country. The remaining 28 per cent is split equally between EM and DM countries with North America and Europe each accounting for 7 per cent and 5 per cent respectively, of EM sales exposure.
In contrast, US companies
derive 71 per cent of their revenues domestically, 12 per cent from Europe, 8 per cent from APxJ (including 4 per cent from China) and 4 per cent from Latin America. On the other hand, 46 per cent of European company revenues come from Developed Europe, followed by 30 per cent from EM and 21 per cent from North America. China exposure is around 8 per cent.
Eye on Asia, EM
Among the other Asian and EM, Taiwanese, Saudi Arabian, Hong Kong, Singaporean, South African, and Mexican companies derive over half of their revenue from foreign markets.
Among the lot, Taiwanese, Mexican, Japanese, Saudi Arabian and Korean companies are the most exposed to the US, each generating over 10 per cent of their revenue from the US.
“Taiwanese companies, in particular, generate 27 per cent of their revenue from the US market, largely because Taiwan is an important part of the semiconductor supply chain and serves as major suppliers for Apple. Russian companies are the most exposed to developed Europe – this mainly reflects its Energy and Materials sectors. Indonesian, Taiwanese, Hong Kong, and Australian companies are the most exposed to China in terms of revenue,” the Morgan Stanley
Within the EM, the information technology (IT) sector tops in terms of foreign exposure. On the other hand, real estate, utilities and financials are the most domestic- and least DM-exposed sectors.
“EM's IT and Consumer Discretionary companies are more exposed to DM markets
than to EM (ex-home), while Materials, Energy and Consumer Staples are more exposed to EM (ex-home) markets than to DM,” the report said.
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