Average Robot Density in Manufacturing Industry by Country

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Robots are increasingly replacing human workers in many industries. The manufacturing industry including the auto industry is one of the few industries that has embraced the use of robotics in operations. Despite the cost benefits some countries have higher penetration rate for robots than others. According to one research report published in 2014, countries like South Korea, Japan and Germany have higher number of robots relative to workers in the manufacturing industry.

The chart below shows the number of multi-purpose industrial robots per 10,000 employees in the manufacturing industry:

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Source: Are Robots Disruptive? … or could they be the saving grace for ageing societies?, July 2017, The Absolute Return Letter, Absolute Return Partners

Update 99/11/17):

Robot Density in Select Countries

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Source: US Funds

Two Reasons To Invest In Emerging Market Stocks

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Investing in emerging market equities offers many benefits. Two of the key reasons to invest in them are diversification benefits and higher returns.

1.Diversification Benefits:

The diversification benefits of owning emerging stocks is significant. Equity markets of developing countries have low co-relation to developed countries. The chart below shows the real benefits of emerging stocks.

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2.Higher Returns:

Emerging stocks have offered higher returns than developed markets as shown in the chart below.

 

 

Source: Rally in Emerging Market Equities Peaking, or Just Beginning?, Thornburg Investment Management

Related ETFs:

  • iShares MSCI Emerging Markets ETF (EEM)
  • Vanguard MSCI Emerging Markets ETF (VWO)

Disclosure: No Positions

A Note on Tech Sector Dividends

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The tech sector used to be a growth only sector many years ago. They did not pay any dividends. At the height of the dot com boom many tech companies made no profits at all. So dividend payments were out of the question. Since investors were looking for mostly growth they did not worry about earning income from the sector.

However the tech sector has changed a lot since that time. Today many of the large-cap tech firms have huge cash piles that they are able to return to shareholders in the form of share buybacks and dividends and focus on growth according to an article by Ben Lofthouse at Janus Henderson. Some examples of such companies are Cisco(CSCO), Nintendo, Qualcomm(QCOM) and Apple(AAPL).

The tech sector’s dividend yield has risen significantly since the peak of the dot com era. The chart below shows the growth dividend yield or the MSCI Information Technology Sector Index:

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article-technology-pays-dividends-chart-2

Source: Technology Pays Dividends, Janus Henderson

The aggregate dividend yield on the index was 1.50% as of February this year. However of the 165 constituents in the index the yields vary widely among the individual stocks.

It should be noted that some of the popular names in the sector such as the FANG stocks(Facebook, Amazon, Netflix and Alphabet(GOOG)) still do not pay a dividend.

Some of the top dividend payers in the tech sectors include Cisco(CSCO), Qualcomm(QCOM) and Apple(AAPL), Microsoft(MSFT), Intel(INTC) and Taiwan Semiconductor(TSM).

The key takeaway for investors is that the tech sector now pays dividends but the yield is still low but growing. Investors have to very selective in picking names for both growth and income.

Disclosure: No Positions

Emerging Market Stocks are Cheaper Relative to US Stocks

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In a post yesterday I discussed about the elevated levels of US stocks. In today’s article let us take a look at how emerging stocks are cheaper compared to US stocks based on a recent research report.

From a research report by Charlie Wilson,Phd , Portfolio Manager at Thornburg Investment Management:

Despite the improvement in underlying earnings quality and the nascent recovery, the forward P/E multiple for the MSCI EM Index isn’t stretched. The 2018 earnings multiple of 11.4x (as of June 28, 2017) sits just above the 10-year average of 11.2x. This is hardly stretched relative to the history of the index or global equities in general. After five strong years of U.S. equity-performance, the MSCI EM Index remains at a large discount to the S&P 500 even after the recent recovery (the S&P 500 is valued at 18.7x currently)(Figure 8). That discount has continued to increase even during the recent emerging markets rally. As you can see, for a variety of reasons, the MSCI EM Index has room to run.

Source: Rally in Emerging Market Equities Peaking, or Just Beginning?, Thornburg Investment Management

Emerging stocks can be highly volatile but in the long-term they have yielded higher return than developed markets. In addition, though developing countries have smaller economies than many larger developed economies, the economic growth rate is higher in emerging than developed countries. So in order to profit from the growth opportunities it is wise to invest in emerging stocks.

Five stocks from emerging markets are listed below for further research:

1.Company: Banco de Chile (BCH)
Current Dividend Yield: 3.28%
Sector:Banking
Country: Chile

2.Company: Enel Generacion Chile SA (EOCC)
Current Dividend Yield: 7.74%
Sector:Electric Utilities
Country: Chile

3.Company: Ultrapar Participacoes SA (UGP)
Current Dividend Yield: 2.24%
Sector: Oil, Gas & Consumable Fuels
Country: Brazil

4.Company: HDFC Bank Ltd (HDB)
Current Dividend Yield: 0.58%
Sector: Banking
Country: India

5.Company: PetroChina Co Ltd (PTR)
Current Dividend Yield: 1.42%
Sector: Oil & Gas
Country: China

Note: Dividend yields noted above are as of July 7, 2017. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: No Positions