With the recent escalation of the overseas epidemic, many investors are concerned about the impact of the epidemic on the overseas exposure of Chinese listed companies.
In early March, Changjiang Securities published a research report titled "Which Industries Have a Large Overseas Exposure," which proposed that "overseas exposure and export elasticity are key factors in assessing the risk of overseas revenue. Some essential and high-tech products have a large exposure, but are relatively less affected." On March 25, UBS Securities published an article titled "UBS China Stock Strategy: Insights from 2008 for the Current Market". This report suggests that the overseas revenue exposure of Chinese listed companies is significantly lower than that of other major global markets. Even in the event of a global economic downturn, Chinese listed companies have a stronger ability to withstand the slowdown in external demand compared to other countries.
From Figure 1 and Figure 2, it can be seen that:
- The overseas sales revenue of the CSI 300 and MSCI China accounts for 7%, while the S&P 500 accounts for 24%, the Nikkei 225 accounts for 38%, and the Nasdaq 100 accounts for 41%. Surprisingly, the DAX accounts for as much as 60%.
- Whether it is net export or total export as a percentage of GDP, China's proportion is not very high, far lower than that of countries like Germany and South Korea that heavily rely on exports for GDP.
Figure 1: Comparison of the overseas revenue of MSCI China and CSI 300 with global indices
Note: Bubble size represents 2018 revenue. For US stock indices, if there is no domestic US data, we use data from the North American region.
Source: Reuters, Wind, UBS Securities estimates, and UBS Securities official account
Figure 2: Proportion of China's exports to GDP compared to major global countries
Note: Bubble size represents 2018 nominal GDP
Source: CEIC, UBS Securities estimates, and UBS Securities official account