US Stocks Are Highly Valued Relative to Historical Average: Chart

US stocks continue to remain elevated since the beginning of the year and the elections. Stocks in certain sectors such as financials have soared substantially since the elections.This week the tech-heavy NASDAQ crossed the record 6,000 mark. Despite the superb performance of US equities, investors need to be cautious since the P/E ratio of US stocks look steep relative to historical average and when compared to other markets.

From an article at Allianz Global Investors:

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The US Equity Market Is Highly Valued

The current price-to-earnings ratio of the US market is significantly higher than its 30-year average

Source: Datastream, MSCI, Shiller, AllianzGI as at 1 March 2017

The eight-year US equity bull market has time and again confounded its many detractors, helping US stocks remain among the top performers since the global financial crisis began. With such a history of strong results, it is easy to argue why many long-term investors should continue holding this asset class in their portfolios.

At the same time, the US equity market is highly valued – the current Case-Shiller price-to-earnings ratio of 29.8 is almost double its long-term average – leaving other investors to question whether this is currently the place to pursue growth potential and protect purchasing power.

Source: Six pressure points for US stocks, Allianz

These 10 Companies Pay Half of all UK Dividends

The British equity market is an excellent hunting ground for yield-seeking investors. British firms have a strong dividend culture and have high dividend yields on their equities. For American investors, an added advantage is that there is no withholding taxes on dividends (excluding REITs).

Despite the pros, the British stock market has a structural issue according to a study Henderson Global Investors. From an article quoting the study:

The top ten companies pay half of all UK dividends, with the top 20 companies paying 70% of all UK dividends.

Source: Seven out of 10 UK equity income funds hold these 10 companies, MoneyWise, April 21, 2017

Hence investors seeking to gain exposure to British income stocks may want to consider adding the top ten companies. These stocks are listed below their current dividend yield on the US market:

1.Company: AstraZeneca PLC (AZN)
Current Dividend Yield: 4.70%
Sector: Pharmaceuticals

2.Company: Vodafone Group PLC (VOD)
Current Dividend Yield: 5.93%
Sector: Wireless Telecom

3.Company: British American Tobacco PLC (BTI)
Current Dividend Yield: 3.21%

4.Company: GlaxoSmithKline (GSK)
Current Dividend Yield: 4.92%
Sector: Drugs

5.Company: HSBC Holdings PLC (HBSC)
Current Dividend Yield: 6.38%
Sector: Banking

6.Company: BP PLC (BP)
Current Dividend Yield: 7.06%
Country: UK

7.Company: Royal Dutch Shell PLC (RDS.A)
Current Dividend Yield: 7.31%
Sector: Oil, Gas & Consumable Fuels

8.Company: Legal & General PLC (LGGNY)
Current Dividend Yield: 9.80%
Sector: Insurance

9.Company: Aviva PLC

10.Company: Imperial Brands PLC (IMBBY)
Current Dividend Yield: 4.02%

Note: Dividend yields noted above are as of April 24, 2017. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: No Positions


Foreign-born Population As a Percentage of Total Population for Select Countries

The number of foreigners (i.e. foreign-born people) relative to total population varies across countries. Some countries such as those in Eastern Europe have low foreign-born population since they have been closed economies until the iron curtain fell. Luxembourg(LUX) and Switzerland (CHE) have the highest foreign-born population since they are tax havens. Mexico (MEX) and Poland(POL) have the lowest foreign-born population according to the latest OECD data. In the US, the rate is under 15%.

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Source: OECD Factbook 2015-2016

Samsung Organizational Structure

The South Korean economy is dominated by a handful of Chaebols. One of these conglomerates is Samsung. The following chart shows the size and complexity of Samsung:

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Source: Why a horse named Vitana V might be good news for Korean equities, The Equities Forum, M&G Investments

Also see:

The Top 12 Current Account Surplus Countries

The Top 3 current account surplus in 2006 were China, Japan and Germany in that order. In 2016, Germany became the world’s top current account surplus country:

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Source: Your morphing global savings glut, FT Alphaville

From an investment point of view, sometimes surplus countries are better for investment than deficit countries. The US is traditionally a current account deficit country.Last year the country was the world’s top deficit country.