Examining Sectors and Portfolios by Revenue | Capital Group

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Investment Insights

January 2014

Economic Exposure Case Studies: Examining Sectors and Portfolios by Revenues

The Technology Sector Through the Revenue Lens

The technology sector provides valuable information. As represented in the MSCI ACWI Information Technology Index, 73% of the market capitalization of technology companies is in the United States on the basis of domicile, but only about half of their revenues come from the U.S. Developing economies account for a third of the global demand for technology products and services. All of it may not be end-consumer demand, since a majority of the manufacturing of technology products happens in Asia, and some of the revenues are of intermediate products such as semiconductor chips. But these intermediate products also represent important sources of revenue for several technology giants such as Samsung Electronics, Intel and Qualcomm.

MSCI ACWI InfoTech Index

The U.S. represents a lower percentage of demand for technology products compared to the representation of the companies based in that country.

MSCI ACWI InfoTech Index by Revenues and Domicile

The U.S. represents a lower percentage of demand for technology products compared to the representation of the companies based in that country.

As of December 31, 2013. Source: MSCI.

Automobiles

Data on the automobile industry confirm what we know anecdotally and from the sales figures of the major auto companies. The Japanese automakers represent a large part of the country’s stock market and more than 40% of the global auto industry’s market capitalization. However, less than 15% of global auto revenues come from Japan. The emerging markets, meanwhile, don’t have a very big auto industry but account for more than a third of global demand for cars and other automobiles.

MSCI ACWI Autos Index

Emerging markets account for more than a third of global demand for automobiles.

MSCI ACWI Autos Index by Revenues and Domicile

Emerging markets account for more than a third of global demand for automobiles.

As of December 31, 2013. Source: MSCI.


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Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and not to be comprehensive or to provide advice.