Euro Tops 50 in One Stock !!!

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Lets say you have $1,000 or even $10K and you want to get exposure to the whole of Western European stocks. In this case, you may want to invest in the largest European companies.

One vehicle to do that is to pick up a few shares of the DJ EURO STOXX 50 ETF with ticker FEZ.This ETF mimics the Dow Jones Euro STOXX 50 index.

What is DJ EURO STOXX 50 ETF ?
It provides a blue-chip representation of the largest companies in the Eurozone. Covers Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.

As the name implies this index has the 50 largest companies in the Eurozone. It includes the the leading banks, utilities, chemical companies etc. Over 50% of the index is concentrated in German and French companies. As usual Financials have the largest representation.

What the heck is Eurozone?
Well its nothing but the zone of many countries where Euro is the currency. For eg. – UK is not in the Eurozone since Euro is not her currency. So in the Euro Stoxx 50 index there are no UK companies. If you want exposure to Europe including UK’s top companies you have to pick up
DJ STOXX 50 ETF (Note: Here you will find the term “Euro” is missing in the title). We will discuss this another time.

What are the constituents of the DJ EURO STOXX 50 ETF ?
TOTAL FINA
BANCO SANTANDER CENTRAL HISP
UNICREDITO ITALIANO SPA
BNP PARIBAS
TELEFONICA SA
E.ON AG
ALLIANZ SE-REG
NOKIA OYJ
SANOFI-AVENTIS
SIEMENS AG-REG
ING GROEP NV-CVA
BANCO BILBAO VIZCAYA ARGENTA
SOCIETE GENERALE
ENI SPA
AXA
INTESA SANPAOLO
ABN AMRO HOLDING NV
DEUTSCHE BANK AG-REGISTERED
DAIMLERCHRYSLER AG-REG
SUEZ SA
FORTIS
BASF AG
DEUTSCHE TELEKOM AG-REG
RWE AG
ASSICURAZIONI GENERALI
FRANCE TELECOM SA
VIVENDI SA
ENEL SPA
UNILEVER NV-CVA
PHILIPS ELECTRONICS NV
BAYER AG
CARREFOUR SA
SAP AG
GROUPE DANONE
ENDESA SA
COMPAGNIE DE SAINT-GOBAIN
MUENCHENER RUECKVER AG-REG
IBERDROLA SA
TELECOM ITALIA SPA
CREDIT AGRICOLE SA
AEGON NV
L’OREAL
LVMH MOET HENNESSY LOUIS VUI
ALCATEL-LUCENT
AIR LIQUIDE
ALLIED IRISH BANKS PLC
REPSOL YPF SA
RENAULT SA
LAFARGE SA
KONINKLIJKE AHOLD NV

FEZ:
This ETF has performed very well for many years now. Has groown from nearly $20 to $60+ now. Has assets of over $500 M and a decent yield.

Click here for more info: http://finance.yahoo.com/q?s=fez

How popular is DJ EURO STOXX 50 ETF ?
Europeans invest a ton of money in any product that follows this index. For example – the iShares DJ Euro STOXX 50 ETF with ticker EUE trading in the UK has an asset base of over €3.8 Billion. It is the largest ETF among iShares’s offering in the UK.

http://www.ishares.eu/fund/fund_overview.do?fundId=157496

Like the British people in France, Germany etc. invest heavily in similar funds trading in their exchanges.

Malaysian ADR Stocks !!

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There seems to a heavy interest in Malaysian ADR stocks among US investors. Due to this high demand, I am devoting this post to major listed Malaysia ADR stocks. This Malaysia ADR list will help investors analyze the various options available to invest in Malaysia.

There are a total of 10 Malaysian stocks trading in the US that are “Sponsored”.All are listed in the OTC exchange. None of them are listed in the NYSE, Nasdaq or Amex exchanges. So these stocks may be subject to liquidity risk.

The following are the Malaysian ADR stocks listed in the OTC exchange and have price per share of above $5 and are traded daily:

  1. Genting – GEBHY.pk
  2. Malayan Banking – MLYBY.pk
  3. Resorts World – RSWSY.pk
  4. Tenaga Nasional – TNABY.pk
  5. Kuala Lumpur Kepong – KLKSY.pk

Other stocks that are available but are very illiquid and very low priced are:

  1. Top Glove – TGLVY.pk
  2. SilverStone – SVTOY.pk
  3. MBF Holdings – MBFBY.pk
  4. Lion Industries – LICUY.pk
  5. Amsteel Corp – AMSBY.pk


Stock Pick – Descriptions:

1&2) Genting & Resorts World: Genting & Resorts World are related to one another. Genting Highlands is a hill station near Kuala Lumpur. Genting means “Top of the Clouds” in Chinese. Being a hot tropical country people prefer to escape to the hills where the temperature is cool. Genting is holding company with interests in a lot of industries whereas Resorts World concentrates on hotels and the hospitality sector. Resorts World operates many hotels including the “First World Hotel” in Genting. This hotel is actually two towers comprising of over 6000 rooms (picture below).

The hotels are fully booked most of the time especially during the holidays and weekends. It has a theme park, water park and casinos. The casinos are a big draw with many tourists from nearby countries where they are illegal.On a recent visit to the hotel, I observed the whole place is crowded like crazy with thousands of people waiting on the lounge to check in. Quite a sight to see.

Considering the facts above Genting and Resorts World are very good picks to invest in. For more details on these companies checkout: http://www.genting.com.my/en/accommodation/index.asp

3)Kuala Lumpur Kepong:
Like so many other Malaysian companies, this one also operates in many industries and is listed in the Main Board of Bursa Malaysia. It has been in operation since 1906.

One of the main business of this company is in the plantation business – specifically Palm Oil plantations. In a typical plantation thousands of Palm trees are grown and then the palm seeds are crushed to make Palm oil. In many developing countries Palm oil is used in cooking instead of vegetable oil. Malaysia is the #1 exporter of Palm oil and this brings a few billion dollars in foreign exchange to the country. So this is another good Malaysian stock that you can invest in.

The company has a property development division which is successful as well.

More information can be found at their “Investor Relations” site here:
http://www.klk.com.my/ir_lp.htm

4)Tenaga Nasional:
It is the largest electric utility in Malaysia serving over seven million customers. The majority owner of this utility is the Malysian Government. Foreigners own 25% of the shares – the maximum limit possible by law.

Because of government control on power prices, after 12 years the company increased prices last year resulting in doubling of profit.

Please visit their IR site to learn more:
http://www.tnb.com.my/tnb/inv_highlights.jsp

5) Malayan Banking Berhad aka. May Bank:
May Bank is the largest bank in Malaysia.The bank operates in Malaysia as well as many Asian countries like China, Singapore,Cambodia,Vietnam, Hong Kong, Phillipines etc. It is the second largest listed in the Malaysian Stock Exchange – Bursa Malaysia. In 2006, the company had assets of US $64 Billion.

May Bank IR site:
http://www.maybank2u.com.my/corporate/financial_info.shtml

 The best option to invest in Malaysia is thru the iShares Malaysia ETF: EWM

This fund has grown nicely over the years and has now an assets size of over $1.0B. The fund has a yield of 3.14% and an expense ration 0.51%.

Financials and Consumer Stocks constitue over 62% of EWM.
The fund has a total of 59 stocks and the four stocks described above (GEBHY.pk, RSWSY.pk, TNABY.pk and MLYBY.pk )
are in the top 10 stocks.

Detailed information on iShares Malaysia ETF can be found at:
http://www.ishares.com/product_info/fund/overview/EWM.htm

Related Links:
The Star Newspaper – http://biz.thestar.com.my

Kuala Lumpur Stock Exchange (KLSE) Stock Review Blog – http://klsestockreview.blogspot.com/

Cheers !!!!

Invest(some) in Closed-End Funds (CEFs) !!!

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There are many investors who would like to invest in foreign country stocks but do not want to take the risk of picking up individual stocks. This is a wise move since it is difficult to get complete information on many foreign stocks and also the there are many other unknown risks involved with individual companies. For these folks there are three choices by which they can buy a basket of stocks and reduce some risk involved.

These three options are: Exchange-Traded Funds (ETFs), Open-ended Mutual Funds and Closed-End funds(CEF)s.

Route #1: Open ended -MFs:
There are very few open ended mutual funds that are available to invest in a specific country. There many funds for a specific region such as the Asia-Pacific. But the problem with these regional focused funds is that they may heavily overweight in one country while having small exposure to other countries. For eg. – most of the Asian Pacific ones will have a heavy weightage in Japan. If an investor does not want to invest too much in Japan then this fund is not for them. So such investors can take the route of ETFs. But that may not be suitable for all investors as described below.

Route #2: ETFs:
While ETFs are great products due to their many advantages such as dynamic pricing, tax advantages etc. they are still fairly new to many folks. ETFs are bit complex for some folks to understand. Concepts like “creation units”, redemptions of units and the way ETFs operate can get tricky to understand. ETFs also encourage some folks to trade often which can wipe out any gains due to tax reasons.

So some investors totally avoid ETFs and stay with traditional products.

Route #3: Closed-End Funds (CEFs):
For those investors who do not like ETFs and those that are frustrated with the lack of country specific open ended MFs – there is a choice and that is the Closed Ended Funds (CEFs).

Country-Wise CEFs: There are many country specific CEFs to choose from. However there are not CEFs for all countries. For example, Argentina does not have one. The following ones are some of the country specific CEFs available to invest:

 1. Japan Equity Fund – JEQ
 2. Templeton Dragon Fund – TDF
 3. New Germany Fund – GF
 4. New Ireland Fund – IRL
 5. Swiss Helvetia Fund – SWZ
6. The Korea Fund – KF, Korea Equity Fund – KEF
 7. Chile Fund – CH
 8. Mexico Equity and Income Fund –MXE, Mexco Fund – MXF
 9. The China Fund – CHN
10. India Fund – IFN
 11. Spain Fund – SNF
12. Thai Fund – TTF
 13. Indonesia Fund – IF
14. Aberdeen Australia Equity Fund – IAF
15. First Israel Fund – ISL
16. Malaysia Fund – MAY
17. Singapore Fund – SGF
18. Taiwan Fund – TWN
19. Turkish Investment Fund – TKF

How should you choose a CEF?

Look for the following characteristics in your CEF selection:

  1. Consistent performance over time – at least 5 years. If you don’t want to review the performance numbers, at least check the charts.
  2. Good Yield – even if that’s a small rate
  3. Size of the fund – Go with higher asset size funds
  4. Fund Company – Choose companies with a long established records
  5. Unit price – Pick ones that are selling at a discount its NAV. Funds selling at a discount means they are cheaper – kinda like a “Sale” at a shop
  6. Expense Ratio – Avoid those that have high expense ratios.

There are many regional ETFs for Eastern Europe, Asia Pacific, Latin America etc. We will discuss those in a future post. Cheers !!!

Black Gold Beauties !!!!!

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With Crude oil touching the $100 barrel mark recently it makes sense to dig into the oil company stocks. Demand is going thru the roof worldwide while supply seems unable to keep up due to many reason like some “rebels” attacking pipelines in Nigeria to oil well blowups or explosions in some refinery someplace.
Or for that matter supply is “suppressed” by the OPEC Cartel when the price goes down slightly. Whatever the reason the price at the pump keeps going up and no wonder oil company stocks have risen handsomely over the past few years.

Outside of US there are plenty of energy companies that are growing exponentially and rewarding shareholders year after year. Whether its Pemex of Mexico, Petronas of Malaysia or Petrobras of Brazil or that world’s first “Trillion”$ market cap stock PetroChina of China, profits keep gushing like the first oil well in Texas.

Listed below are some of these high growth energy company stocks from other countries:

1.Hungary – MOL Magyar Olaj-ES Gazipari
Ticker – MGYOY.pk

This company is active in the crude oil and natural gas business in central and eastern Europe.Stock has grown from < $15 to over $85 in the past 5 years.

2. South Africa – Sasol Ltd.
Ticker – SSL

Operates in crude,gas, chemical sectors. Owns the only inland crude oil refinery in South Africa.Has been trading in NYSE since 1994.South Africa, being the most developed country in Africa with lots of cars, this company is the “sweet spot”.

3. Brazil – Petrobras
Ticker – PBR

This one is the largest traded foreign stock in the US. The government of Brazil owns 30% of this company and this stock rose from nearly $50 a few months ago to over $117 recently. Seems like a well run Brazilian operation that makes all the right moves at the right time including discovering new oil deposits.

Wealth Builder: A $10,000 investment in PBR stock 5 years ago would have grown to $196,695 as of Jan 3rd, 2008.

Source: S&P; Report dated 1/3/08.

4. Argentina – Pertobras Energia
Ticker – PZE

Argentina holds a lot of potential.The country has the most Europeans among South American countries and is recovering nicely from the economic collapse a few years ago.

Other oil companies worth looking into are:

5. TotalFina from France – TOT
6. Repsol from Spain – REP
7. BP from good old UK – BP
8. StatOilHydro from Norway – STO
9. Eni from Italy – E

The above mentioned companies are well oil(ed) money making machines.
So join the party while it lasts !!!

Dividends Gems !!!

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When evaluating companies for hi-yields (i.e.) high dividends look for companies with high “Payout Ratio”.

Payout Ratio is a ratio of how much the company is paying out in dividends each year based on its earnings. It is calculated by dividing the dividends paid per share in year by Earnings Per Share (EPS). Put another way, it is the amount of profits that a company pays out.

Lets say a company had an EPS of $4 in a year and it paid $2 in dividends annually.
The payout ratio is $2/$4 = 50%. Banks, Utilities usually have payout ratios of 30% to 40% or even higher.

Why is Payout Ratio important?
This is important because it cannot be “faked”. Dividends are paid out of profits and it is very difficult for a company to manipulate numbers and tell shareholders that it made a profit.
When a company pays good dividends it usually means it earned it.