Dividends and Risk and opportunity: US stocks with high exposure to China

All investors know China is important player in the world of trade and for supply chains around the world, many manufacturing jobs moved from North America to China and South east Asia. However when the coronvirus went through China and the government of China effectively closed down the country, as investors you want to know how much of an impact the shutting down of China has. The good news are there are companies which breaks down every public company to where they receive their revenues. One company is called FactSet GeoRev.

In this example, Arjun Deiva of FactSet broke down revenues from China

He started with the S&P 500 with US companies

Then companies with greater than 10% of their revenues from China using FactSet GeoRev

The US-China Phase 1 trade deal was signed on Dec 13, FactSet examined the weeks of Dec 6 to Dec 20 stock price performance and limited the results to outperformed the S&P 500 to see if there was any correlation of the announcement with stock performance.

Company Mkt Cap Annual Sales Chinese TLT Returns Dividend Recent

$ bil $ bil Revenue % Yield Close

Western Digital 19.997 16.569 23.2 24.5 3.0 67.24

Qorvo 12.443 3.090 55.0 9.4 0.0 107.56

Skyworks Solution 19.572 3.376 20.6 17.3 1.5 115.03

Nvidia 147.082 11.716 23.2 12.8 0.3 240.33

Applied Materials 54.859 14.608 28.4 9.2 1.4 59.72

Micron Technology 59.742 23.406 15.4 14.9 0.0 53.78

Lam Research 43.941 9.642 21.7 10.7 1.5 308.44

Maxim Integrated Prod 16.389 2.314 34.1 7.4 3.2 60.84

KLA Corp 26.813 4.564 25.8 9.0 2.0 169.93

Qualcomm 98.788 24.273 46.4 6.0 2.9 86.48

Baker Hughes 22.088 23.838 14.9 13.0 3.3 21.51

Texas Instruments 115.012 14.383 43.1 5.4 2.9 123.40

Linking to dividend paying stocks, most of the companies above are in the technology sector, which is a good place to have your money invested. You might be surprised at how dependent they are towards China. It also makes policy and trade deals more complex because whether the services are software or hardware, the Chinese eventually learn and they could become competitors. The trade deal was supposed to be about intellectual property, as an investor is hard to know what the results are. If you own an Nasdaq Index fund, many of the companies have Chinese connections.

There are more questions than answers, till the next time – to raising questions.

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