Whitepaper - Morningstar Indexes - When Gauging the Impact of Geopolitical Risk on Equity Markets, Consider Their Revenue Sources

With wars raging, trade tensions rising, and elections challenging established orders, geopolitical risk is high on investors' minds. Morningstar Global Market Indexes’ revenue sources are revealing:

Many national equity markets are not very national. The Morningstar US Market Index, for example, derives just 60% of revenues from the US.
Emerging markets, especially in Asia and Eastern Europe, are the most domestic in their revenue sources. Tech-heavy Taiwan and Korea stand out as exceptions.
Revenue sources help explain why correlations between developed markets have risen, while emerging markets tend to be less correlated with developed markets.
Contrary to the narrative that globalization is in decline, just 16 of 48 markets became more domestic in their revenue sources compared with last year.
Sector-level dynamics help explain market-level revenue trends. Technology companies tend to be more global, while the financial services sector is generally more domestic.

Author:

Dan Lefkovitz, Strategist, Morningstar Indexes

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