It pays to have China exposure, even during two years of the trade war, MSCI index shows
- MSCI index that covers global companies with biggest exposure to China has risen almost 14 per cent since the trade war started in 2018
- US chip makers Qualcomm, Broadcom pace gains on the index, have risen at least 29 per cent over the past two years
Companies with the biggest business exposure to China appear to have weathered the US-China trade war far better than those that have avoided the Chinese market, as the spat between the world’s two largest economies marks its second anniversary.
US chip makers, in particular, seemed to have thrived, leading the gains on an equity index tracking the biggest global companies that derive a big chunk of their revenue from China since the trade war first flared up in the opening week of July 2018.
Shares of Qualcomm, which supplies chips to Chinese smartphone makers, have surged almost 60 per cent in this time span, while those of Broadcom have advanced 26 per cent. Both of these companies as well as Texas Instruments are among the top four weightings on the MSCI World with China Exposure Index. Broadcom makes radio frequency chips for Apple products and Wi-fi components, and Texas Instruments makes chips for industrial and automotive products.
This surprising outperformance underscores how deeply China and the United States are integrated in each other’s supply chains. Qualcomm, Broadcom and Texas Instruments count on China for at least 36 per cent of their revenues, according to Bloomberg data.
On the other hand, China relies on imported American technology from these companies, as well as others, to keep afloat its high-end manufacturing sector, which makes products ranging from smartphones to telecoms equipment that are sold all over the world.
