China's economic recovery impact on S&P 500 limited, investors remain cautious

The ongoing economic recovery in China may not significantly impact the S&P 500, despite its sluggish pace. This was reported on Monday, suggesting that Chinese operations contribute to merely 5% of the total revenue of companies listed in the S&P 500, according to Scott Chronert from Citi.

Chronert further pointed out that a total loss of revenue from China would result in about a 7% decrease in the S&P 500 earnings, a substantial but not disastrous scenario. A 5% reduction in revenue from China would lead to a slight 0.3% decline in earnings-per-share (EPS) for the index. If half of all revenue from China were eliminated, the S&P 500 EPS would drop by approximately 3.4%.

However, investors are advised to stay vigilant as a slowdown in China could potentially cause future problems. This is particularly relevant for companies with significant weightings in the index, such as Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), Tesla (NASDAQ:TSLA), and Meta Platforms (NASDAQ:META). These seven major companies earn more than 10% of their revenue from China. Therefore, while the overall risk to the index is relatively minor, there might be pockets of risk and volatility if there's a significant slowdown in China.

Certain industries like tech, autos, household products, and pharma have a higher-than-average exposure to China which could lead to an unstable profit outlook. Furthermore, some U.S. businesses are at an even greater risk as they derive over 30% of their revenue from China. These include Las Vegas Sands (NYSE:LVS), Aptiv (NYSE:APTV), Estée Lauder, Lam Research Corp (NASDAQ:LRCX)., Western Digital Corp (NASDAQ:WDC)., and Micron Technology (NASDAQ:MU).

Despite recent positive news about Chinese retail sales and industrial production, investors remain cautious. In August alone, foreign investors withdrew nearly $15 billion from Chinese stocks. While U.S. stocks have so far avoided the volatility experienced by offshore Chinese counterparts this year due to hopes of economic recovery, companies with substantial China exposure may continue to be viewed as less attractive by some investors.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Begin trading today! Create an account by completing our form

Privacy Notice

At One Financial Markets we are committed to safeguarding your privacy.

Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.

Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.

Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.

By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70.8% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Back to top

Office network

One Financial Markets is the trading name of Axi Financial Services (UK) Ltd, a company registered in England with company number 6050593. Axi Financial Services (UK) Ltd is authorised and regulated by the Financial Conduct Authority in the UK (under firm reference number 466201) and the Financial Sector Conduct Authority in South Africa (with FSP number 45784).

The information on this site is not directed at residents of the United States, Belgium, Poland or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. is owned and operated by Axi Financial Services (UK) Ltd.

Award winning broker
We have been presented with a number of awards that recognise the quality of our service and dedication to our clients :

Best FSA Regulated Broker
Saudi Money Expo

Best Education Product
Saudi Money Expo

Best Broker - Online Trading
IAIR Awards

Best Institutional Broker
Saudi Money Expo

Best FX Services Broker
CN Forex

Top International
FX Broker 2015

Saudi Money Expo

Broker of the Year
Online Trading – Middle East

IAIR Awards

Best Forex
Customer Service 2018

JFEX Awards

We accept the following payment methods: