We can dig deeper to understand the economic exposure of individual securities and equity portfolios to China’s economy, based on sources of company revenues. Using the MSCI Economic Exposure database, chart 1 shows that the most exposed developed equity markets are Singapore, Hong Kong, Taiwan, Australia and Korea.
(Feb 28): The number of people infected and affected by the coronavirus continues to grow globally. Governments, as well as agencies such as the World Health Organization, are working tirelessly to contain, and ultimately defeat the virus. In China, local governments have locked down cities and businesses and restricted travel while the general public has adopted voluntary home quarantine. In all, the human toll has been steep.
But as with many crises, the repercussions of the coronavirus can also be felt in the global economy and the financial markets. Many observers compare the coronavirus to the 2003 SARS epidemic. While this can provide useful insight, there are differences between the two periods to consider. China is a much bigger part of the global economy and markets than it was 17 years ago. China’s share of global trade also rose to 11% in 2018 from 5% in 2003, based on World Bank statistics. Meanwhile, its share of the MSCI Emerging Markets Index has risen to 34.3% from 7.86% in 2003.
