Dominance of US Companies in Global Sectors and Industries

Are global indexes as “global” as you think they are?

With the aim of tracking market performance around the world, these indexes incorporate securities from various regions. However, while the number of securities may be relatively well diversified across countries, a dollar perspective tells a different story. When market capitalization is taken into account, country weightings may become much more unbalanced.

Today’s visualization is based on a concept by S&P Dow Jones Indices that shows the percentage of U.S.-based companies in global sectors and industries as of December 31, 2019. The calculations reflect the market capitalization of companies in the S&P Global Broad Market Index (BMI), an index that tracks over 11,000 stocks across 50 developed and emerging economies.

Percentage of U.S. Companies by Sector

U.S-based companies—those that maintain their primary business affairs in the U.S.—are a major component of many global sectors and industries.

Here’s how it breaks down:

Sector	% of U.S.-based Companies	Most U.S.-heavy Subsector
Information technology	73%	Software (86%)
Health care	65%	Health care providers (82%)
Utilities	53%	Electric utilities (57%)
Real estate	51%	Equity REITs (69%)
Consumer discretionary	49%	Specialty retail (73%)
Consumer staples	46%	Household products (74%)
Industrials	46%	Aerospace & defense (73%)
Energy	44%	Energy - other (73%)
Financials	44%	Financials - other (73%)
Materials	30%	Chemicals (41%)

U.S.-based companies make up a staggering 73% of the information technology (IT) sector. However, China may soon threaten this dominance. The Made in China 2025 plan highlights new-generation IT as a priority sector for the country.

Healthcare is also heavily skewed towards U.S-based stocks, which make up 65% of the sector’s market capitalization. This weighting is perhaps not surprising given the success of many U.S. healthcare companies. In Fortune’s list of the 500 most profitable U.S. companies, 41 healthcare organizations made the cut.

The materials sector has the smallest weighting of U.S.-based stocks, but they still account for almost one-third of the overall market capitalization. Three American companies are in the sector’s top 10 holdings: Air Products & Chemicals, Ecolab, and Sherwin-Williams.

U.S. Equity Views in a Global Context

Given the high weighting of U.S. stocks in global sectors and industries, having a U.S. view is important. This refers to investors gaining a clear perspective on the risks and opportunities that exist in the country. Investors can consider the trends influencing American companies in order to help explain stock performance.

U.S. stock dominance also impacts geographic diversification. While it helps non-U.S. investors overcome their home bias, American investors may want to consider targeting specific international markets for well-rounded exposure

Coronavirus and Contactless Payments

Ever since people sheltered at home, payments experts all around the world, started predicting how it would impact cash and cards. Half of consumers say they’re using contactless payments more — and more than half of U.S. consumers seem to recoil at the notion of providing a signature at the point of sale, a new Mastercard survey suggests.

About a third of U.S. consumers also said they’re using their contactless card more than other cards in their wallet, which could be a positive development for large issuers like Chase, Wells Fargo, Citi and Bank of America, which began pumping large numbers of contactless cards out last year.

The data shows that over the course of several weeks, coronavirus has done something that payment industry players had failed to do on their own: jolted consumers into changing long-entrenched habits.

The Futurist Group, a financial services and information management consultancy, conducted a two-wave study of 3,187 U.S. consumers before and after the coronavirus began spreading. About 38% of consumers now see contactless as a basic need or feature of payments, up from 30% a year ago. The proportion of consumers saying they don’t need contactless payments has fallen from 41% in March 2019 to 33% in March 2020.

“The coronavirus could be the tipping point for contactless in the U.S. much like the liability shift was for EMV,” said Demitry Estrin, founder and CEO of the Futurist Group. “Despite issuers pumping out millions of contactless cards and more stores accepting Apple Pay, U.S. consumers have just shrugged their shoulders while the world embraced contactless payments. The question has always been, ‘What will get consumers to change their payment behavior?’ Given coronavirus fears, I think we now have the answer.”

U.S. card issuers have been seeding the landscape with contactless cards since last year — an estimated 40% of cards have contactless capabilities, as banks and credit unions steadily replace expiring EMV contact-only cards with NFC-enabled cards.

About 60% of merchants’ POS terminals are contactless-enabled, supporting payments with contactless cards or mobile payments such as Apple Pay, Google Pay or Samsung Pay via devices and wearables. Mastercard surveyed 1,000 consumers April 10 to April 12.

Significantly, almost half of consumers Mastercard surveyed said they wipe their payment cards clean after using them, which could be a sign that mobile payments — which currently account for less than 10% of contactless payment transaction volume — could eventually gain more traction by eliminating the need to handle a physical card.

Now that more consumers are leery of handling cards and receipts, signatures are more likely to get phased out, streamlining checkouts.

More than three-quarters (77%) of consumers now see contactless as a “cleaner” way to pay, while 70% say it’s more convenient than cash and 67% rate it as a faster way to check out. About half say that contactless payments are more secure.

Supermarkets are the top location where consumers say they’re using contactless payments, at 85%, followed by pharmacies (39%), general retail (38%) and fast-food outlets (36%), while 9% mention using contactless payments on mass transit during the coronavirus.

More than half of survey respondents, or 56%, said they plan to continue using contactless payments when coronavirus fades