FactSet Insight - Commentary and research from our desk to yours

S&P 500 Companies with Higher Exposure to Asia Outperformed in Last Month

Written by John Butters | Sep 8, 2017

“Our commitment among the allies are ironclad. Any threat to the United States or its territories, including Guam, or our allies will be met with a massive military response, a response both effective and overwhelming. [...] We are not looking to the total annihilation of a country, namely North Korea, but as I said, we have many options to do so.” –U.S. Defense Secretary James Mattis, September 3, 2017

Military tensions between the U.S. and North Korea have escalated in recent weeks.  Should tensions escalate to the point of affecting economic activity, how many S&P 500 companies could be impacted? How much revenue exposure do S&P 500 companies have to the Asia Pacific region?

According  to  FactSet  Market  Aggregates  and  FactSet Geographic  Revenue  Exposure  data  (based  on  the  most recently reported fiscal year data for each company in the index), the aggregate revenue exposure of the S&P 500 to  the Asia/Pacific super-region is 10.9%.

However, a number of S&P 500 companies have significant revenue exposure to the Asia/Pacific super-region.  Overall, 82 S&P 500 companies have revenue exposure of 20% or more to the Asia/Pacific super-region, and 22 S&P 500 companies have revenue exposure of 40% or more to the Asia/Pacific super-region.

Given the escalation in tensions, have S&P 500 companies with more exposure to the Asia/Pacific super region underperformed the index as a whole in recent weeks?  The answer is no.

For the entire S&P 500 index, the average price change for a stock from August 7 through September 7 was -1.1%. For the companies in the index with at least 20% revenue exposure to the Asia/Pacific super-region, the average price change over this period was +0.5%.  For  the  companies  with  at  least  40%  revenue  exposure  to  the Asia/Pacific super-region,  the  average  price  change over this period was +2.0%.

For the entire S&P 500 index, the median price change for a stock from August 7 through September 7 was -0.3%. For the companies in  the  index  with  at  least 20%  revenue exposure  to  the Asia/Pacific super-region,  the  median  price  change  over  this  period was +0.8%. For the companies with at least 40% revenue exposure to the Asia/Pacific super-region, the median price change over this period was +1.3%.