Does Greece post higher risk in investing in Europe?
While the Greece Saga continues to develop, the burning question in investors’ minds will be the risk involved in investing in Europe. A closer look at the Stoxx 600 index shows that Greece represents an insignificant 0.54% of the index. Investors who are exposed to European equities via Europe equity funds will probably have insignificant Greek company exposure as well. Looking at the Stoxx 50 index’s constituent companies (these 50 companies represents 50.3% of Stoxx 600 index weightings), we extracted and compiled in table 2 the percentage of revenue earned by each company outside Europe. The median band of revenue earned outside Europe is 41% to 60%. 28 of the 50 companies have 41% to 80% of their revenue earned outside Europe. This is not surprising as Europe houses several renowned global companies such as British Petroleum (BP), Hong Kong & Shanghai Banking Corporation (HSBC), Nestle, Novartis and Total S.A who are the top 5 companies by market capitalisation in Stoxx 50 index.
