Fact of the Day: China Hi-Speed Rail Network

Posted by on

High Speed Rail Network in China is the largest in the world even beating developed Europe. The following fact the astonishing growth in high-speed rail transportation in China.

High-speed rail network before 2007 = 0  kilometers

High-speed rail network now = 25,000  kilometers 

Source: Seeing is believing – China’s amazing growth over 40 years, China Daily

In just 10 years the Chinese have successfully built the network from scratch spanning 25,000 kms. Curious minds are thinking how many years it will take the US to beat the Chinese in this form of transportation by building 25,000 kms or the lesser equivalent in miles.

Tax Revenues as a Percentage of GDP: Chart

Posted by on

Tax revenues as a percentage of GDP vary widely across countries.  The chart below from OECD shows the figures for the latest year available:

Click to enlarge

Source: Seven surprising facts about tax revenues around the world, Schroders

Though Greece and Italy have often been criticized they generate more taxes as a percentage of GDP than most other economies. Most European countries especially France and Nordic countries have higher tax revenues than the OECD average.

The US rate is lower than the OECD average and Mexico has the lowest tax revenues as a percent of GDP among OECD member nations.

The Major Goods Trading Partners With The US: Chart

Posted by on

China is the top trading partner with the US. Neighbors Canada and Mexico are the second and third major trading countries followed by Japan, Germany, etc.

Updated: 12/23/2019

Click to enlarge

Source: Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States, U.S. DEPARTMENT OF THE TREASURY OFFICE OF INTERNATIONAL AFFAIRS, April 2018

India’s Sensex Reached A New Record High

Posted by on

The Indian equity market is on fire with the benchmark BSE Sensex index reaching a new record high yesterday. The index rose 352 points or 0.95% to reach 37,336. Sustained capital inflows and India’s insulated economy from the impacts of Trump’s trade wars are fueling the surge in stocks. In dollar terms, the Sensex is up by 9.6% YTD.

The chart below shows the 5-year return of the Sensex:

The chart below shows the long-term return of the Sensex:

Source: Google Finance

From a recent journal article:

Analysts point to several reasons for the rally. For a start, India is booming, even as neighboring China shows signs of slowing, and was the fastest-growing big economy in the first three months of 2018. All else being equal, solid growth bodes well for corporate earnings, and tends to send shares higher.

In fact, per-share earnings for companies in MSCI’s India index should rise 28% in 2018, far outpacing the roughly 15% growth for emerging markets in Asia as a whole, said Ben Luk, a global macro strategist at State Street Global Markets. It helps that net profits last year were rather lackluster, especially for financial firms, he said.

In addition, millions of Indians are pouring money into shares for the first time. That has supported stock prices even as overseas buyers, who own roughly a quarter of the market, have grown more cautious. Locals added roughly $800 million in new positions this month, overwhelming the $44 million sold by foreigners.

Unlike rivals in Tokyo and Shanghai, for example, which experienced previous huge rallies, peaking in 1989 and 2007 respectively, it is also comparatively easy for this market to break new ground.

Moreover, India is comparatively less exposed to changes in U.S. trade policy. The U.S. -China spat has rippled through Asia, hurting companies that rely on cross-border trade.

Source:Indian Shares Set Records, WSJ

The soaring Sensex has been powered by a handful of stocks and some analysts are remain cautious. From an article at First Post:

The Sensex hit dizzying heights, reaching the 37,000-level for the first time on Thursday on widespread buying in capital goods, FMCG, realty and banking stocks by domestic institutional investors. The benchmark index also gained on positive global cues.

The NSE Nifty too scaled a new peak of 11,172.20 points.

Stock market analysts are optimistic and told Firstpost that the Sensex and the Nifty will peak further. Analysts said that by Diwali, the Sensex could touch 38,000 points and the Nifty could hit the 11,500 points milestone. However, they cautioned that though the indices are on a high, and have logged an upward momentum over the past few days, the upbeat sentiment is reflected in only the top 10-12 stocks on the Bombay Stock Exchange. The mid-caps and small caps are still low, they said.

Source: Sensex at record high of 37,000 is just an illusion; rally led by just top 10 stocks, say analysts. FirstPost

In addition, the market capitalization of India equity market has actually dropped by 8.44% in dollar terms in 2018.

Source: Indices at record highs but India’s market cap down over 8% in 2018. Live Mint

Related ETFs:

  • WisdomTree India Earnings (EPI)
  • iShares S&P India Nifty 50 Index Fund(INDY)
  • PowerShares India ETF (PIN)

Disclosure: No Positions

Two Key Differences Between S&P Emerging BMI and MSCI Emerging Markets Indices

Posted by on

The three largest index providers in the world are S&P DJI, MSCI, and FTSE Russell. For emerging markets, the MSCI Emerging Markets Index is the most popular and widely used benchmark globally. Though MSCI and S&P indices are similar there are significant differences between the indices offered by these companies. It is important to understand these differences especially for investors that go with derived products such as an Emerging Markets ETF for example.

Click to enlarge

Source: A Primer on Country Classification in the Context of Saudi Arabia’s Upgrade to Emerging Market Status, Michael Orzano , S&P Indexology

The first key difference is that S&P has classified South Korea as a developed country since 2001. But MSCI continues to consider it as an emerging market. So South Korea is part of the MSCI Emerging Markets Index and accounts for 15% of the weightage. This potentially crowds out other less-developed market from the index.

The second difference is that MSCI initiated a partial inclusion of China A-shares in its benchmarks as of June 1, 2018. However S&P DJI and FTSE Russell have not included these shares in their indices yet. These firms are currently reviewing Chinese shares for potential inclusion in their respective emerging market indices.

In addition to China’s A-Shares, Argentina and Kuwait are also under review by S&P for reclassification from frontier to emerging markets.

Related ETFs:

  • Vanguard MSCI Emerging Markets ETF (VWO)
  • iShares MSCI Emerging Markets ETF (EEM)
  • PowerShares MENA Frontier Countries ETF (PMNA)

Disclosure: No Positions

Earlier: