China Slowdown: US Companies That Stand to Lose

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(List compiled by Andrew Dominguez based off of a list by TheStreet. Data sourced from Finviz and TheStreet.)

Many seem to be concerned over the slowdown occurring in China. The slowdown is result of the government’s concerted effort to rein in inflation and thereby cooling economic growth.

Data released Thursday shows that the government policies could be taking effect. 

The HSBC PMI, an index tracking Chinese managers’ factory orders fell to 48.9% in July, reports Reuters. The index is a measure, from zero to 100, of the percentage of purchasing managers expecting to increase orders. Values lower than 50 suggest contraction.

The PMI data signals the first contraction in the Chinese manufacturing sector in a year. The sector comprises forty percent of GDP, write Kevin Yao and Emily Kaiser of Reuters.

Of course, a slowdown in China is much more like slowing from a run to jog than slowing to the snail’s pace that the US is experiencing. The Chinese economy is expected to expand by over 9% this year (via The New York Times).

"The slowdown at the moment is policy induced. There is an awful lot of easy growth to come," Stephen Green of Standard Chartered Bank told Reuters.

Economic data this year has not led to a consensus regarding China. According to Yao and Kaiser, the IMF released two reports this year. One supports the government slowdown policies that they expect will decrease inflationary pressures and a possible property bubble.

The other report describes the concerns of China’s trading partners regarding a possible economic “hard landing,” citing the possibly unsustainable double-digit annual GDP growth China experienced last decade. In particular, they are worried that government policies have led to overinvestment, which creates excess capacity (ie, too many expensive roads and not enough cars to drive on them).

Caterpillar, the construction equipment behemoth, recently announced their bullish outlook on the Chinese economy, which they hope will help boost its earnings.

“In our view, China is doing a good job of balancing growth and inflation, and our expectations for China remain positive.” (via Business Insider)

Interested in the Chinese economy? To help you conduct your own analysis, here is a list of companies with significant exposure to China.

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List sorted according to percentage of revenues generated in China.

1. Wynn Resorts Ltd. (WYNN): Resorts & Casinos industry with a market cap of $20.43B. It generated approximately 69% of its revenues in China.

2. Novellus Systems, Inc. (NVLS): Semiconductor Equipment & Materials industry with a market cap of $2.9B. It generated approximately 40% of its revenues in China.

3. Yum! Brands, Inc. (YUM): Restaurants industry with a market cap of $25.37B. It generated approximately 37% of its revenues in China.

4. Broadcom Corp. (BRCM): Semiconductor industry with a market cap of $18.67B. It generated approximately 32% of its revenues in China.

5. NVIDIA Corporation (NVDA): Semiconductor industry with a market cap of $8.83B. It generated approximately 30% of its revenues in China.

6. Applied Materials Inc. (AMAT): Semiconductor Equipment & Materials industry with a market cap of $17.04B. It generated approximately 26% of its revenues in China.

7. QUALCOMM Incorporated (QCOM): Communication Equipment industry with a market cap of $95.06B. It generated approximately 25% of its revenues in China.

8. Analog Devices Inc. (ADI): Semiconductor industry with a market cap of $10.93B. It generated approximately 20% of its revenues in China.

9. Jabil Circuit Inc. (JBL): Printed Circuit Boards industry with a market cap of $4.33B. It generated approximately 20% of its revenues in China.

10. Teradyne Inc. (TER): Semiconductor Equipment & Materials industry with a market cap of $2.64B. It generated approximately 8% of its revenues in China.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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