Knowledge is Power: Healthcare Stocks, Dividend Sustainability, US Make-Work Program Edition

Posted by David Hunkar on 11 September 2016, 9:06 am

Health stocks: beyond politics (Fidelity)
Emerging-Market Small Caps: A Distinct Growth Opportunity (Franklin Templeton)
Five things investors need to worry about for the rest of 2016 (Financial Post)
The great American make-work programme (FT Alphaville)
Germany’s massive CA surplus set to decline (DB Research)
Dividend sustainability: companies cannot squeeze the lemon forever (Money Observer)
Top earners: Why did the 1% get so rich? (OECD Observer)
Gold is still a good hedge when volatility rises (Blackrock Blog)

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China’s Land and Sea Silk Roads

Posted by David Hunkar on 10 September 2016, 7:46 am

China is building infrastructure not only within the country but also outside of China. Currently two major initiatives are underway to create China’s 21st century silk roads for trade and economic cooperation between the country and rest of the world.

1. China’s Land Silk Road Map

This initiative involves building rails, roads and pipelines to link Central Asia to Europe. Major cities like Almaty in Kazakhstan, Bishkek in Kyrgyzstan and Minsk in Belarus are part of this multi-year project.

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2. China’s 21st Century Maritime Silk Road

Similar to the land silk road, China is also building the modern-day version of sea silk road connecting ports in many countries to increase trade relationship. The project involves building ports, hotels, developing sites, residential buildings, shopping malls, etc. in target cities. These ports include Male in Maldives, Colombo in Sri Lanka, Gwadar in Pakistan, Djibouti on the Horn of Africa and others.

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Source:

China Heads West – Beijing’s New Silk Road to Europe, Der Spiegel
The Maritime Silk Road –China’s High Seas Ambitions, Der Spiegel

Corporate Tax Rates n Select OECD Countries 2016

Posted by David Hunkar on 9 September 2016, 1:21 pm

The US has the highest corporate tax rate in OECD countries and Switzerland has the lowest rate in 2016. While France is generally known for high taxes some may find it surprising that the US has the highest rate at 35%.

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Source: Apple Gets a Shakedown from the EU. Is Ireland Next to Bail?, US Funds

On the Performance of Foreign Bank Stocks Year-To-Date

Posted by David Hunkar on 9 September 2016, 9:21 am

Among the foreign bank ADRs, emerging market banks have performed very well so far this year relative to their developed world peers. This is not surprising since most emerging markets are up by double digit percentage points this year and financials are the main drivers of growth in these markets. As the pillars of the local economy banks tend to perform well when the overall economy in in expansion mode.

The table below shows the year-to-date price returns of foreign bank stocks:

S.No.	Bank	Ticker	Share Price on Sept 8, 2016	Year-To-Date % Change	Country
1	Banco Bradesco	BBD	$9.39	114.87%	Brazil
2	Banco Bradesco - Com	BBDO	$9.40	97.89%	Brazil
3	Banco Santander Brasil	BSBR	$7.10	82.52%	Brazil
4	Itau Unibanco	ITUB	$11.41	75.27%	Brazil
5	Bancolombia	CIB	$42.07	57.27%	Colombia
6	Woori Bank	WF	$30.81	36.33%	Korea
7	Banco Macro	BMA	$77.27	32.95%	Argentina
8	KB Financial Group	KB	$35.79	28.42%	Korea
9	Banco Santander Chile	BSAC	$21.34	20.98%	Chile
10	HDFC Bank	HDB	$73.55	19.40%	India
11	Banco de Chile	BCH	$67.47	16.11%	Chile
12	Grupo Financiero Galicia	GGAL	$30.20	11.52%	Argentina
13	Shinhan Financial	SHG	$37.21	10.78%	Korea
14	BBVA Banco Frances	BFR	$20.45	7.18%	Argentina
15	ICICI Bank	IBN	$8.26	5.49%	India
16	Banco Santander	SAN	$4.73	-2.87%	Spain
17	HSBC	HSBC	$38.19	-3.24%	United Kingdom
18	Westpac Banking	WBK	$22.85	-5.70%	Australia
19	Sumitomo Mitsui Financial	SMFG	$7.01	-7.64%	Japan
20	Banco Bilbao Vizcaya Argentaria	BBVA	$6.46	-11.87%	Spain
21	Mizuho Financial	MFG	$3.48	-13.86%	Japan
22	Mitsubishi UFJ Financial	MTU	$5.35	-13.99%	Japan
23	Lloyds Banking Group	LYG	$3.17	-27.29%	United Kingdom
24	Barclays Bank	BCS	$9.23	-28.78%	United Kingdom
25	Credit Suisse	CS	$13.66	-37.02%	Switzerland
26	Royal Bank of Scotland	RBS	$5.37	-39.46%	United Kingdom
27	Itau CorpBanca	ITCB	$13.16	-8.80%	Chile

Note: The above returns are only price returns (excluding dividends)

Source: BNY Mellon

A few observations:

Brazilian lender Banco Bradesco(BBD) has more than doubled. But it has only doubled from single digit prices. The other two Brazil banks noted above have soared also.
With oil rices rising and peace returning to the country, Colombia’s BanColombia has increased by over 57%.
British and other developed European lenders are still struggling to recover from years of poor returns.For example, Royal Bank of Scotland(RBS) is down about 40% and continues to let down investors for years in a row.

Disclosure: Long CIB, BBD, ITUB, SAN, BBVA, BSAC, BCH

Callan Periodic Table of Investment Returns: Currency

Posted by David Hunkar on 9 September 2016, 3:11 am

The currency market is the largest market in the world with trillions of dollars worth of global currencies traded. This market is larger than equities, oil and bond markets. One of the reasons that currency markets are bigger than equity markets is because central bank are the major participants in the market. On a daily basis these banks and other institutions trade currencies with one another.

However currency trading is not suitable for most retailers for many reasons. For example, currencies are extremely volatile and can move either direction for any number of reasons including political stability or the lack of it. Hence the majority of retail investors are better off to stay out of the currency markets.

The chart from Callan Associates below shows the annual returns of major currencies from 2006 to 2015:

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Source: Callan Associates

TopForeignStocks.com

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Knowledge is Power: Healthcare Stocks, Dividend Sustainability, US Make-Work Program Edition

China’s Land and Sea Silk Roads

Corporate Tax Rates n Select OECD Countries 2016

On the Performance of Foreign Bank Stocks Year-To-Date

Callan Periodic Table of Investment Returns: Currency