Hedging Risk: How to Pandemic- Proof Globalization

bee

I wanted to revisit a conversation on globalization and start a new thread on this "new normal".

I found this article regarding globalization regarding this present health threat (Covid-19).

As airports, factories, and shops slow down or shut down, the novel coronavirus pandemic is testing the international supply chains that define the current era of globalization. And the multi-factory and often multi-country manufacturing processes used by companies around the world are proving more fragile than anticipated. If the virus and the economic wreckage it is causing aren’t contained soon, blueberries and avocados won’t be the only things missing from market shelves across the still chilly Midwest and Northeast United States. Cars, clothes, electronics, and basic medicines will run short as far-off factories disconnect.

how-pandemic-proof-globalization

If you own equities you're probably a global investor. This article mentions that S&P 500 companies derive about 70% of the revenues from the US, the rest outside of the US.

What I wonder is how dependent are these S&P 500 companies on the rest of the world with regard to the production of these products/services. How do we maintain supply lines across borders?

how-global-is-s-and-p-500

As for cars, here are a couple of examples of where parts are sourced for a single integrated product like a car.:
a-graphic-representation-of-whats-really-made-in-america

2019-american-made-index-whats-the-most-american-car





A closer look at individual S&P 500 companies and why they maybe more Multinational than American:

why-us-companies-arent-so-american-anymore

As we get back to our "New - New Normal" I wonder how investment risk will be described and hedged when it come to these interconnected markets. What hedging strategies do investors need in their portfolio to hedge risk.

Comments welcome.

carew388

bump