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For the second year running, we applied Morningstar's Revenue Exposure by Region data to our family of country indexes, which span 48 developed and emerging equity markets. The aim is to reflect geographic exposure, based not on where companies are located but where they do business. With the coronavirus pandemic ravaging the global economy, investors are both examining their portfolios for vulnerabilities and considering opportunities. Linkages between markets are important to consider.
An Interconnected World
According to the map below, thirty-one of Morningstar's 48 country indexes source more than one third of their revenues from outside their home markets, using estimated data from corporate filings. That includes the United States and Japan, both of which saw an increase in foreign-sourced revenue compared with last year's study. Look at the global players that dominate the Morningstar US Market Index--Microsoft (MSFT), Apple (AAPL), and Google parent Alphabet (GOOG)--and the two largest companies in Japan's market, Toyota and Sony, and it's clear why.