Returns of Eurozone Banks Since 52 Week High: Chart

Posted by David Hunkar on 30 September 2016, 5:32 am

Deutsche Bank(DB) stock reached a record low yesterday. The largest German bank fell to its 30-year low. The US ADR plunged on heavy volume to as low $11.19.

Most of European financial institutions are still suffering since the global financial crisis of 2008-09. Political dithering and lack of effective actions by these banks have led to the sad state affairs for the once mighty banks.

I came across the following chart of Wolf Street at MarketWatch showing the dramatic decline in the share prices of Eurozone banks:

Click to enlarge

Source: Wolf Street via Deutsche Bank crisis threatens to roil global markets, MarketWatch

Disclosure: No Postiions

The World’s Top 10 Tourism Destinations

Posted by David Hunkar on 30 September 2016, 3:21 am

Tourism is one of the fastest growing industry in the world. Countries that offer the necessary infrastructure for tourism development reap great economic benefits. In 2015, international toursim generated US$ 1.5 trillion in export earnings according to The World Tourism Organization (UNWTO).

Among the countries visited by tourists, France tops the ranking with over 84.5 million visitors followed by the US and Spain. Of the top 10 countries, three developing countries in the list. These are China, Turkey and Mexico.

The world’s 10 most visited countries:

Click to enlarge

Source: UNWTO via DW

The Top 25 Global Public Cash-Rich Companies

Posted by David Hunkar on 29 September 2016, 3:11 am

Public companies world-wide continue to hoard a significant portion of their assets in cash and cash equivalents rather then investing them. Large US firms are among the top hoarders of cash. There are a few logical reasons for holding cash such as taxation on profits repatriated to the US from overseas. But the negative effects of hoarding cash outweighs the positive and logical reasoning. For example, companies usually tend to waste shareholders wealth on acquiring other firms at unjustified prices just because they have tons of cash and management is incompetent to deploy it on productive purposes.

Global Finance magazine published a ranking of the world’s top 25 public firms based on cash on their balance sheet. The methodology used to select the firms:

The Global Finance Cash 25 ranks public companies by cash, cash equivalents and short-term securities on their balance sheets. Data is gathered from more than 70,000 public companies worldwide. It is a ranking of nonfinancial corporations—we exclude financial institutions from the list. Subsidiaries and nonpublic companies are excluded, and we use a minimum 25% holding for the path from a subject company to its ultimate owner as the cutoff for inclusion.

The Top 25 Global Public Companies by Cash on their Balance Sheet:

Rank	Company	Country	Industry	Cash^ ($m)	Cash^ ($m) Previous Year	Change (YoY $m)	Total Assets ($m)
1	MICROSOFT	US	Technology	96282	85465	10817	176223
2	GENERAL ELECTRIC	US	Industrial	70483	90025	458	493072
3	CISCO SYSTEMS	US	Technology	60416	52074	8342	113481
4	TOYOTA MOTOR*	Japan	Automotive	43427	41500	1927	397384
5	APPLE	US	Technology	41601	25077	16524	290479
6	JOHNSON & JOHNSON	US	Consumer Products	38376	33089	5287	133411
7	AMGEN	US	Biotech	31382	27026	4356	71449
8	TOTAL	France	Oil and Gas	29459	26474	2985	224484
9	INTEL	US	Technology	25313	14054	11259	101459
10	GENERAL MOTORS	US	Automotive	23401	28176	-4775	194338
11	PFIZER	US	Pharma	23290	36122	-12832	167381
12	SAMSUNG ELECTRONICS	South Korea	Consumer Electronics	23253	18309	4944	206550
13	VODAFONE	UK	Telecoms	20795	15891	4904	192587
14	HON HAI PRECISION INDUSTRY	Taiwan	Consumer Electronics	20143	21572	-1429	70038
15	COCA-COLA	US	Beverages	19900	21675	-1775	89996
16	AMAZON	US	Retail	19808	17416	2392	65444
17	DAIMLER	Germany	Automotive	18574	18123	451	236429
18	TAIWAN SEMICONDUCTOR	Taiwan	Technology	17785	13789	3996	50292
19	QUALCOMM	US	Telecoms	17321	17565	-244	50796
20	SONY*	Japan	Consumer Electronics	15703	18270	-2566	131832
21	MITSUBISHI	Japan	Automotive	15590	15663	-73	132436
22	HYUNDAI MOTOR	South Korea	Automotive	14883	19969	-5085	141039
23	GILEAD SCIENCES	US	Biotech	14607	10128	4479	51716
24	ENEL	Italy	Utilities	14175	20727	-6552	175476
25	GREE ELECTRIC	China	Consumer Products	13682	8928	4755	24,90

* FY 2014, all others FY 2015 ^Includes cash, cash equivalents and short-term securities (those maturing between three months and a year). Data valid as of July 21, 2016.

Source: The World’s Richest Companies 2016: Global Cash 25, Global Finance

A few observations:

US tech firms such as Cisco(CSCO), Interl(INTC), Apple(AAPL), Microsoft (MSFT) etc. hold billions in cash. Unlike other industries tech companies tend to use their cash more for growth by acquisitions than use it for organic growth.
Globally automotive firms also hoard large amounts of cash.
While large cash hoards helps management to deploy it any way they wish, they do not mean much to shareholders. In fact, some investors prefer firms to invest the cash productively or distribute them to shareholders.

Disclosure: No Positions

Stock Market: India Outperforming Other BRIC Countries

Posted by David Hunkar on 28 September 2016, 3:21 am

Indian stocks have outperformed so far this year relative to Brazil, Russia and China. The benchmark S&P BSE Sensex is up by 8.3% this year as of Sept 25th. From a journal article on Indian stocks today:

Click to enlarge

Once lumped in with a block of emerging markets termed the BRICs—Brazil, Russia, India and China—India has lately diverged from the group, in part thanks to its heavy weighting toward domestic consumption. By contrast, Brazil and Russia have been hit by the slump in global commodity prices, while China’s exports have suffered from a slowdown in world trade.

Over the past three years, Indian shares have gained a cumulative 44%, beating the 37.5% rise in China’s Shanghai Composite, and well ahead of the 8% rise in Brazilian shares and the 31% drop in Russia.

India’s inflation has eased, its trade deficit has narrowed thanks to lower oil prices, and the rupee has been relatively stable against the U.S. dollar this year. Recent good monsoon rains could help boost agricultural productivity, and thus consumer demand from rural India.

Source: Indian Stocks Stand Out From the Crowd, WSJ, 9/26/16

Here are few facts about India and Indian stocks:

Over 5,500 companies trade on the Bombay Stock Exchange. However of the major 200 firms only 100 are freely traded and the rest are largely owned by founders.
The Sensex P/E ratio is 18.5 compared to long-run average P/E of 15.5. So Indian stocks are not cheap.
With a projected GDP of $10.0 Trillion, India is poised to become the third-largest economy by 2030.
India’s Forex reserves are at a record $356 billion.
The number smartphones in the country has doubled in recent years to over 81 million units.
Due to high number of listings on the BSE, India is an excellent hunting ground for stock pickers.

Source: Above WSJ article and Aberdeen

India ADRs:

The complete list of Indian ADRs trading on the US markets can be found here.

ETFS: The Complete List of India ETFs and ETNs Trading on the US Markets

The World’s Safest Banks 2016

Posted by David Hunkar on 27 September 2016, 5:21 am

The Global Finance magazine published their 25th annual ranking of the World’s 50 Safest Banks earlier this month. The full list of the banks will be published in the November issue.

From the press release:

“The Safest Banks ranking for 2016 illustrates the impact of some the past year’s major political and economic shifts, with low oil prices in particular having significant impact on Gulf economies. With Brexit-like populism on the rise in many countries, political tensions threaten to derail reforms. Our ranking provides a consistent metric by which clients can compare the stability and security of banks across countries and regions,” says Global Finance publisher and editorial director Joseph D. Giarraputo.

Global Finance’s annual ranking of World’s 50 Safest Banks has been the recognized and trusted standard of financial counterparty safety for a quarter-century. Winners were selected through an evaluation of long-term foreign currency ratings—from Moody’s, Standard & Poor’s and Fitch—and total assets of the 500 largest banks worldwide.

The World’s Safest Banks 2016 are shown below:

Rank	Bank Name	Country
1	KfW	Germany
2	Zürcher Kantonalbank	Switzerland
3	Landwirtschaftliche Rentenbank	Germany
4	L-Bank	Germany
5	Bank Nederlandse Gemeenten (BNG)	Netherlands
6	Nederalndse Waterschapsbank	Netherlands
7	NRW.BANK	Germany
8	Banque et Caisse d'Epargne de l'Etat	Luxembourg
9	Caisse des Dépôts et Consignations	France
10	Toronto-Dominion Bank	Canada
11	DZ Bank	Germany
12	DBS Bank	Singapore
13	Svenska Handelsbanken	Sweden
14	OCBC Bank	Singapore
15	Korea Development Bank	South Korea
16	United Overseas Bank	Singapore
17	Export-Import Bank of Korea*	South Korea
18	Banque Cantonale Vaudoise	Switzerland
19	Deutsche Apotheker- und Ärztebank	Germany
20	Royal Bank of Canada	Canada
21	Commonwealth Bank of Australia	Australia
22	National Australia Bank	Australia
23	ANZ Group	Australia
24	Westpac	Australia
25	Industrial Bank of Korea	South Korea
26	Société de Financement Local (SFIL)	France
27	Pictet & Cie	Switzerland
28	Rabobank	Netherlands
29	Nordea	Sweden
30	Swedbank**	Sweden
31	Hang Seng Bank	Hong Kong
32	National Bank of Abu Dhabi	UAE
33	AgriBank	United States
34	Caisse centrale Desjardins	Canada
35	Kiwibank	New Zealand
36	China Development Bank	China
37	Sparkassen-Finanzgruppe (Sparkasse)	Germany
38	Scotiabank	Canada
39	Agricultural Development Bank of China	China
40	Bank of Montreal	Canada
41	U.S. Bancorp**	United States
42	Export-Import Bank of China	China
43	CIBC	Canada
44	SEB**	Sweden
45	DNB	Norway
46	HSBC France	France
47	Qatar National Bank	Qatar
48	CoBank	United States
49	National Bank of Kuwait	Kuwait
50	OP Corporate Bank (formerly Pohjola)	Finland

* Greatest gain over position on the 2015 list
** New entry to the ranking

Source: Global Finance

Download: The World’s Safest Banks 2016 (in Excel)

A few observations:

Despite Brexit and other issues, European banks dominate the top 10 list.
While Deutsche Bank(DB) is bogged down in controversy Germany-based KfW has taken the top spot for fifth year in a row.
TD Bank (TD), one of the big five Canadian banks, came in at tenth rank.
Three banks from Singapore – DBS Bank(DBSDY), OCBC and United Overseas Bank(UOVEY) appear in this list.
Four major Aussie banks making it to this ranking is not surprising. Similarly a few other major Canadian banks also made the cut.
Among the US banks, US Bancorp(USB) took the 41st spot.

I have written about other banks in this list such as Svenska Handelsbanken and Nordea(NRBAY) before. From an investment perspective, these safest banks are some good options for investors to consider in the global banking industry.

Disclosure: Long USB, TD

TopForeignStocks.com

Your Money. Your Future.

Returns of Eurozone Banks Since 52 Week High: Chart

The World’s Top 10 Tourism Destinations

The Top 25 Global Public Cash-Rich Companies

Stock Market: India Outperforming Other BRIC Countries

The World’s Safest Banks 2016