Each year the United Nations Conference on Trade And Development [UNCTAD] publishes the World Investment Report. The 2009 report is a formidable document with over 300 pages and was published in July.
Growth in the developed markets is projected to be lackluster next year. But emerging markets are expected to continue to have higher growth like they have been experiencing in the past few years. Emerging market countries like China, Brazil, India, Russia, Chile, Malaysia, Colombia, etc. were largely unaffected by the credit crisis and the recession that impacted the developed world in 2008 and most of this year.One way for investors to cash in on the strong growth in emerging markets is to select companies in those markets.
However, that may not suit all investors as it is time consuming to do research and the risks involved may be hard to stomach. As a result, some investors stick with companies that they are already familiar with and choose those that generate a higher portion of their earnings from abroad. For example, many U.S. giants like Procter & Gamble (NYSE:PG), Coca Cola (NYSE:KO), Walmart (NYSE:WMT) etc. have extremely strong overseas presence and accordingly significant sales and revenues from those markets in certain segments.
The World Investment Report 2009 lists The World’s Top 100 Non-Financial Trans-National Companies [TNCs] Ranked by Foreign Assets, 2007. This list can be used to identify top companies with high exposures to foreign markets. For example, US-based General Electric (NYSE:GE) is ranked number one in terms of foreign assets held and its TNI percentage is 51.4%. “TNI, the Transnationlity Index, is calculated as the average of the following three ratios: foreign assets to total assets, foreign sales to total sales and foreign employment to total employment.”
GE’s total sales in 2007 was $172B out of which more than 50% ($86B+) came from foreign countries. Similarly, GE had more employees in foreign countries than in the US. While in the domestic market, GE is nowadays considered as a financial services company with flat growth, in foreign countries GE is known more for its investment in manufacturing operations.
The World’s Top 10 Non-Financial TNCs, Ranked by Foreign Assets 2007 are:
1. General Electric (GE)
2. Vodaphone plc (NASDAQ:VOD)
3. Royal Dutch Shell (RDS.A, RDS.B)
4. British Petroleum Company Plc (NYSE:BP)
5. ExxonMobil (NYSE:XOM)
6. Toyota Motor (NYSE:TM)
7. Total (NYSE:TOT)
8. Electricité De France (OTC:ECIFF)
9. Ford Motor Company (NYSE:F)
10.E.ON AG (OTCPK:EONGY)
1. The rankings are based on 2007 data since that was the latest full year data available when UNCTAD compiled this report. However the rankings must still be valid as most of these companies have expanded their overseas operations since then.
2. Please note that these rankings are based on not just emerging markets but entire foreign assets. They include all assets outside of home country. Similarly GE’s foreign sales numbers include all sales outside of the U.S.
The full listing of the top 100 companies can be found here.
Disclosure: No positions