Why Investors Should Consider International Equities Now: Infographic

US Stocks have outperformed international stocks over 10 years now. And now it may be time for foreign stocks to play catch and beat their American peers in terms of returns. No country continues to be the top performer for ever year after after year. So US investors may want to consider adding foreign stocks that are attractive at current levels.

The following is an infographic from Brandes on why investors should consider foreign equities now:

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Source: Brandes Investment Partners

The World’s Top 10 Tourism Destinations in 2017

Tourism is one of the major industries in many countries. Europe leads the world in tourist arrival numbers. A few facts about global tourism are:

  • International arrivals grew by 7% in 2017 to 1.3 billion people.
  • International Tourism receipts exceed $1.3 Trillion.
  • Europe received the most arrivals at about 671 million followed by Asia-Pacific and Americas.
  • 1 in 10 jobs is related to Tourism.

With those fascinating figures, the following are the world’s top 10 tourist destinations based on 2017 data:

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Source: UNWTO Tourism Highlights 2018, World Tourism Organization (UNWTO)

France continues to be the top tourist destination. Spain jumped from number 3 to 2 this year. Cities such as Paris and Barcelona are flooded with millions of tourists each year. Among the emerging markets, China, Mexico, Turkey and Thailand attract enough tourists to be in the top 10 ranking.

Leonardo Da Vinci’s To Do List

Italian polymath Leonardo da Vinci is known not only as a great painter but also a great inventor. His voracious curiosity for knowledge and science led him to learn and master a variety of subjects. Recently I came across an article on “The To-Do List” he used to maintain around the 1490s. Unlike most to-do lists that we create using our cellphone apps and computers his to-do list is fascinating to say the least. A typical to-do list might look like :

  1. Play Golf 9-12
  2. Pay Credit Card XYZ
  3. Pay Credit Card ABC
  4. Pay Mortgage
  5. Pay Electric Bill
  6. Pay Gas Bill
  7. Conference in LA
  8. Football Practice Sunday 1-4
  9. Pay Doctor Bill
  10. Laundry
  11. Renew gym membership
  12. Car oil change
  13. Mow lawn
  14. Dinner date with wife

blah blah blah….

The above list is as dull as a to-do list can be.

Compared to the above typical list, below is an excerpt from the article on Leonardo’s to-do list:

[Calculate] the measurement of Milan and Suburbs

[Find] a book that treats of Milan and its churches, which is to be had at the stationer’s on the way to Cordusio

[Discover] the measurement of Corte Vecchio (the courtyard in the duke’s palace).

[Discover] the measurement of the castello (the duke’s palace itself)

Get the master of arithmetic to show you how to square a triangle.

Get Messer Fazio (a professor of medicine and law in Pavia) to show you about proportion.

Get the Brera Friar (at the Benedictine Monastery to Milan) to show you De Ponderibus (a medieval text on mechanics)

[Talk to] Giannino, the Bombardier, re. the means by which the tower of Ferrara is walled without loopholes (no one really knows what Da Vinci meant by this)

Ask Benedetto Potinari (A Florentine Merchant) by what means they go on ice in Flanders

Draw Milan

Ask Maestro Antonio how mortars are positioned on bastions by day or night.

[Examine] the Crossbow of Mastro Giannetto

Find a master of hydraulics and get him to tell you how to repair a lock, canal and mill in the Lombard manner

[Ask about] the measurement of the sun promised me by Maestro Giovanni Francese

Try to get Vitolone (the medieval author of a text on optics), which is in the Library at Pavia, which deals with the mathematic.

Source: Leonardo Da Vinci’s To Do List (Circa 1490), Open Culture

The entire above-linked article is worth a read.

The Indian Economy Is Domestically Oriented

India is the sixth largest economy in the world. According to IMF data, India’s GDP in 2017 was $2.6 Trillion. The trade wars initiated President Trump with China and other countries may not impact India severely as the economy is domestically oriented noted Sukumar Rajah of Franklin Templeton in an article last month.

76% of revenues of companies in the Nifty 500 Index were generated in India as the chart below shows:

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Source: Trade Turmoil Doesn’t Derail Our Outlook for India, Franklin Templeton

From an investment perspective, stocks of Indian firms that are mostly domestic oriented are better bets than those exposed to the US and the global economy. For example, the IT sector is highly dependent on the US and hence investments in the sector can be avoided.

Related ETFs:

  • PowerShares India (PIN)
  • WisdomTree India Earnings (EPI)

Disclosure: No Positions

Foreign Stocks To Watch: What is Veoneer and Energizing Ecopetrol

In this new series I will list out select foreign stocks to watch for the following week. In addition, this post will also include economic events, oil prices, earnings and other related items of interest.

1. Ecopetrol(EC): The Colombia oil producer has been on fire in recent months and its movement is highly related to the price of oil. Brent crude for November 2018 delivery closed at $78.09 on Friday. Rising oil prices together with better earnings and new discoveries should propel the stock further. Last week the stock broke out and reached a new 52-week high of $25.60 on heavy volume. EC is up 72% year-to-date. Related Colombian bank to watch is Bancolombia (CIB).

2.Continental AG(CTTAY): German Auto-parts maker plunged recently on second earnings warning in a span of few months. Stock reached 52-week low of 34$ recently all the way down from a peak of about $62. Market is over reacting to news and further declines may offer potential entry points. Related company to consider is Sweden-based Autoliv(ALV). From a 52-week high of $115 the ADR reached about $84 recently.On Sept 11th, S&P raised its rating on the stock to Strong Buy. Investors can also look into the spinoff Veoneer(VNE) as autonomous driving continues to evolve.

3.Select most fallen year-to-date(YTD) club members: The following stocks have declined sharply YTD. Value investors can research these for possible investment options. Brazilian oil distributor Ultrapar(UGP) is off by 59%. India’s Tata Motors(TTM) is down by over 45%. Others with declines of over 25% YTD include British American Tobacco(BTI), Trivago(TRVG), LG Display(LPL), Telekomunikasi Indonesia(TLK).

4.Notable top performers YTD: Some of the best performing foreign stocks YTD are listed below:

Logitech (LOGI): 41%

Grupo Aeroportuario-OMA (OMAB): 30%

China National Offshore Oil-CNOOC (CEO): 29%

5.Stocks on my radar: Canadian National Railway Co(CNI), Anheuser Busch Inbev NV(BUD), Grupo Aeroportuario del Sureste (ASR), Grupo Aeroportuario del Pacifico (PAC) and Novo Nordisk(NVO)

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Mount Teide National Park, Tenerife, Spain

Disclosure: Long EC, CIB, CNI, CTTAY, CIB

Emerging Markets Have Diverse Macroeconomic Profiles: Chart

Emerging market equities have taken a strong beating this year with countries like Turkey, China, etc. falling by double digit percentage points. The benchmark MSCI Emerging Markets Index has fallen sharply so far this year.

Even with the selloff, fears of a meltdown in these markets are still in investors’ minds. However not all markets are equal and some countries such as Taiwan, Thailand, etc. have stronger economic profiles than others like India, Poland, Argentina, Turkey, etc. according to a note published by Alliance Bernstein.

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Source: Emerging Markets: It’s Not All About Turkey, Alliance Bernstein Blog