Morningstar - Fall 2019 - 48

Strategies

Australia 51.0%

Brazil 80.3%

New Zealand 53.5%

EXHIBIT 2

An estimated 68% of revenue from India is
sourced domestically; the technology
outsourcing companies (Infosys INFY, for
example) that consume significant index weight
are counterbalanced by domestically
focused players such as Reliance Industries and
the big banks. Korea and Taiwan are both
quite outward-looking thanks to technology
players Samsung 5930:KR and Taiwan
Semiconductor TSM.
Japan and the U.S., with an estimated 60% and
66% of revenue sourced domestically,
respectively, are both wealthy and populous
markets, but their indexes contain many
multinationals. The Canadian, Australian, and
New Zealand equity markets each generate
roughly half their revenue domestically and half
from outside national borders.

Morningstar Country Indexes by U.S. Revenue Exposure
Portfolio Score (%)

65.92

29.88-65.91

18.63-29.87

10.63-18.62

0.36-9.16
Russia 2.0%

U.K. 20.6%
Canada 28.2%

United States 65.9%

Ireland 24.7%

Denmark 29.9%
Germany 21.5%

Japan 13.2%

Switzerland 29.2%
Israel 24.1%
Taiwan 23.1%

Mexico 11.3%
Colombia 13.8%

India 13.3%

Brazil 4.1%

Even the most sizable European economies
have equity markets that are far more globally
dependent. Just 29% of revenue for the
Morningstar U.K. Index is sourced domestically.
(Less than 15% is sourced from the eurozone,
for those worried about Brexit-the U.K. equity
market depends more on the United States
and China.) Germany and France, meanwhile,
earn even less revenue domestically; about
25% and 21%, respectively.
Smaller Nordic markets are even more reliant on
the rest of the world. The Netherlands and
Switzerland are among the least domestically
oriented of markets, with 13% and 11% of revenue,
respectively, sourced at home.
As the U.S. Goes
"If the U.S. sneezes, Country X catches the flu"
is a cliché. Yet it rings true for several markets
around the world that source a significant
slug of revenue from the world's largest economy:
Denmark, Switzerland, Canada, Ireland,
Israel, Taiwan, Germany, and the U.K. all exceed
20% revenue exposure to the U.S. market
( E X H I B I T 2 ).

Denmark's exposure owes largely to massive
index constituent Novo Nordisk NVO,
whose diabetes remedies are widely used in the
U.S. Switzerland's Nestle NSRGY, Roche

48

Morningstar Fall 2019

Source: Morningstar Direct. Data as of 03/31/2019.

RHHBY, and Novartis NVS all derive significant
revenue from the U.S. market. Canada's
U.S. exposure comes not only from its energy
companies but also its financial-services
giants, such as Royal Bank of Canada
RY, Toronto-Dominion Bank TD, and Bank of
Montreal BMO.

Ireland's U.S. exposure comes from cement
giant CRH and Kerry Group KYGA:GB;
Israel's from Teva Pharmaceuticals TEVA; Taiwan's
from Taiwan Semiconductor; Germany's
from names such as SAP SAP, Siemens SIEGY,
and Daimler DDAIF; and the U.K. from
BP BP, Shell RDS.B, GlaxoSmithKline GSK, and
AstraZeneca AZN.
Surprisingly, the Mexican market's U.S. exposure,
at an estimated 11%, is fairly low, lower
than Colombia's. India and Japan both source
roughly 13% of their revenue from the U.S.,
the former owing to technology companies and
the latter to companies such as Toyota TM
and Sony SNE. Brazil and Russia have very low
U.S. exposure.

Intertwining Economies
The Morningstar Revenue Atlas also views each
country's revenue exposure to emerging Asia
and to eurozone countries. Some of the results
are illuminating. For example, despite its
geography and links to China, the Australian equity
market has surprisingly low exposure to
emerging Asia, at roughly 11%. Meanwhile, Greece,
Portugal, and Italy are the equity markets
most dependent on the rest of the eurozone for
revenue-an important consideration
for policymakers and politicians managing their
economic futures. (The full report plots
countries' emerging Asia and eurozone exposure
on global maps similar to the exhibits here.)

Investors can use this data to better understand
their risk exposures, diversify their portfolios,
and identify opportunities. K
Dan Lefkovitz is a strategist, index products, with Morningstar.



Morningstar - Fall 2019

Table of Contents for the Digital Edition of Morningstar - Fall 2019

Contents
Morningstar - Fall 2019 - Cover1
Morningstar - Fall 2019 - Cover2
Morningstar - Fall 2019 - 1
Morningstar - Fall 2019 - 2
Morningstar - Fall 2019 - Contents
Morningstar - Fall 2019 - 4
Morningstar - Fall 2019 - 5
Morningstar - Fall 2019 - 6
Morningstar - Fall 2019 - 7
Morningstar - Fall 2019 - 8
Morningstar - Fall 2019 - 9
Morningstar - Fall 2019 - 10
Morningstar - Fall 2019 - 11
Morningstar - Fall 2019 - 12
Morningstar - Fall 2019 - 13
Morningstar - Fall 2019 - 14
Morningstar - Fall 2019 - 15
Morningstar - Fall 2019 - 16
Morningstar - Fall 2019 - 17
Morningstar - Fall 2019 - 18
Morningstar - Fall 2019 - 19
Morningstar - Fall 2019 - 20
Morningstar - Fall 2019 - 21
Morningstar - Fall 2019 - 22
Morningstar - Fall 2019 - 23
Morningstar - Fall 2019 - 24
Morningstar - Fall 2019 - 25
Morningstar - Fall 2019 - 26
Morningstar - Fall 2019 - 27
Morningstar - Fall 2019 - 28
Morningstar - Fall 2019 - 29
Morningstar - Fall 2019 - 30
Morningstar - Fall 2019 - 31
Morningstar - Fall 2019 - 32
Morningstar - Fall 2019 - 33
Morningstar - Fall 2019 - 34
Morningstar - Fall 2019 - 35
Morningstar - Fall 2019 - 36
Morningstar - Fall 2019 - 37
Morningstar - Fall 2019 - 38
Morningstar - Fall 2019 - 39
Morningstar - Fall 2019 - 40
Morningstar - Fall 2019 - 41
Morningstar - Fall 2019 - 42
Morningstar - Fall 2019 - 43
Morningstar - Fall 2019 - 44
Morningstar - Fall 2019 - 45
Morningstar - Fall 2019 - 46
Morningstar - Fall 2019 - 47
Morningstar - Fall 2019 - 48
Morningstar - Fall 2019 - 49
Morningstar - Fall 2019 - 50
Morningstar - Fall 2019 - 51
Morningstar - Fall 2019 - 52
Morningstar - Fall 2019 - 53
Morningstar - Fall 2019 - 54
Morningstar - Fall 2019 - 55
Morningstar - Fall 2019 - 56
Morningstar - Fall 2019 - 57
Morningstar - Fall 2019 - 58
Morningstar - Fall 2019 - 59
Morningstar - Fall 2019 - 60
Morningstar - Fall 2019 - 61
Morningstar - Fall 2019 - 62
Morningstar - Fall 2019 - 63
Morningstar - Fall 2019 - 64
Morningstar - Fall 2019 - 65
Morningstar - Fall 2019 - 66
Morningstar - Fall 2019 - 67
Morningstar - Fall 2019 - 68
Morningstar - Fall 2019 - 69
Morningstar - Fall 2019 - 70
Morningstar - Fall 2019 - 71
Morningstar - Fall 2019 - 72
Morningstar - Fall 2019 - 73
Morningstar - Fall 2019 - 74
Morningstar - Fall 2019 - 75
Morningstar - Fall 2019 - 76
Morningstar - Fall 2019 - 77
Morningstar - Fall 2019 - 78
Morningstar - Fall 2019 - 79
Morningstar - Fall 2019 - 80
Morningstar - Fall 2019 - Cover3
Morningstar - Fall 2019 - Cover4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2024q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019winter
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019fall
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019summer
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019spring
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20191201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20181011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20181201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20171011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20171201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20161011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20161201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20151011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20151201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20141011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20141201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20131011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20131201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20121011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120405
https://www.nxtbook.com/nxtbooks/morningstar/investorconference2012
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20121201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20111011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20111201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20101011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100809_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100607_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100405_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20101201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20091011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008fall
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008summer
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007spring
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007fall
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007summer
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008spring
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008catalog
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008winter
https://www.nxtbookmedia.com