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

35 High-Quality European Dividend Stocks

Posted by David Hunkar on 27 September 2016, 3:21 am

European dividend stocks offers offer higher yields than their US peers. Investors looking to diversify and add dividend stocks from Europe should consider some of the high-quality names in the continent.

From an July article Peter Garnry at Saxo Bank:

In a negative rate environment, a high-dividend yield portfolio is a good component of a long-term asset allocation.

Below, we have listed the highest dividend yield stocks (adjusted for quality) across 35 industries in Europe. The group has an average 12-month forward dividend yield of 5% and an average price-to-book ratio of 5.8, which on the dividend yield is around 25% higher than the current forward dividend yield in the Euro Stoxx 600 index.

Click to enlarge

We have selected the highest dividend paying stocks in each of the 35 largest European industries, but the stock has to be in the upper-half in terms of price-to-book ratio in its industry.

Note: The data shown above is as of July this year.

I have mentioned Sweden-based Nordea Bank (NRBAY) in my earlier articles as a good bank stock to consider for exposure to European banking.

Source: Hunting for yields in a negative rate world, Saxo Bank

Disclosure: No Positions

Will E.ON ADR holders Receive Uniper Shares ?

Posted by David Hunkar on 26 September 2016, 3:21 pm

German utility giant E.ON. AG (EONGY) recently spun off its fossil fuel business into a separate company called Uniper SE. US investors in E.ON may wonder if they will receive shares in Uniper.

Here is some background info on Uniper:

Since January 1, 2016, new E.ON and Uniper have been operating as separate legal entities. From now on E.ON will focus on renewables, energy networks, and customer solutions while Uniper will ensure the security of energy supply through its conventional power generation and global energy trading businesses.

At the E.ON Annual Shareholders Meeting in Essen, the company’s shareholders approved the spinoff of a 53.35 -percent majority stake in the Uniper Group to shareholders by a majority of 99.68 percent.

With the publication of the Prospectus a further important requirement for the listing of Uniper has been fulfilled.

On September 9, 2016 the Frankfurt Stock Exchange admitted Uniper SE shares to trading. As planned, the international energy company will be listed on the Frankfurt Stock Exchange’s Prime Standard on Monday, September 12, 2016. Prior to the admission to listing, the spinoff of Uniper from E.ON was entered into E.ON SE’s commercial register.

Source: E.ON

E.ON ADR holders will not receive shares in Uniper since shares of Uniper SE were not registered under the United States Securities Act of 1933, according to the Citi, the depository for E.ON ADRs.

From a Citi notification:

E.ON SE announced a distribution of One (1) Uniper SE share for every Ten (10) E.ON SE shares held as of ordinary record date. The shares of Uniper SE were not registered under the United States Securities Act of 1933, and therefore Citi was not allowed to distribute the shares to E.ON SE ADR Holders.

As a result, Citi as the depositary has sold the shares of Uniper SE in the local market and will distribute the net proceeds of the sale to the E.ON SE ADR holders.

The books of E.ON SE have been closed for issuances and cancellations from COB September 9, 2016 and will re-open September 26, 2016 COB.

Source: Citi

So ADR holders of E.ON will receive $1.11 in cash for each ADR they own.

Due to the spin-off of Uniper EONGY shares have declined in the past few days. On Friday it closed at $7.27 not far from the 52-week low of $6.93.

Disclosure: Long EONGY

How to Invest in Eurozone Blue-Chip Companies

Posted by David Hunkar on 26 September 2016, 3:31 am

Generally Blue-Chips are used to refer to high quality large-cap established firms.Unlike small and medium caps blue-chips tend to less volatile and the probability of a firm going bankrupt is very small.

In order to identify the blue-chips of Eurozone countries, investors can use The EURO STOXX 50 Index. This index is comprised of 50 blue-chips from the Eurozone member countries of Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.

One simple and easy way to invest in these firms is via the SPDR^® EURO STOXX 50^® ETF (FEZ). This ETF mimics the performance of the index. The fund has a dividend yield of 3.30% and an assets base of over $2.6 billion. The top three sectors in the fund are financials, industrials and consumer-staples.

The full list of the fund’s holdings are shown below:

S.No.	Name	Sector
1	Total SA	Energy
2	Anheuser-Busch InBev SA	Consumer Staples
3	Siemens AG	Industrials
4	SAP SE	Information Technology
5	Sanofi	Health Care
6	Bayer AG	Health Care
7	BASF SE	Materials
8	Unilever NV Cert. of shs	Consumer Staples
9	Daimler AG	Consumer Discretionary
10	Allianz SE	Financials
11	Banco Santander S.A.	Financials
12	BNP Paribas SA Class A	Financials
13	Deutsche Telekom AG	Telecommunication Services
14	ING Groep NV	Financials
15	Telefonica SA	Telecommunication Services
16	LVMH Moet Hennessy Louis Vuitton SE	Consumer Discretionary
17	L'Oreal SA	Consumer Staples
18	AXA SA	Financials
19	Danone SA	Consumer Staples
20	VINCI SA	Industrials
21	Schneider Electric SE	Industrials
22	ASML Holding NV	Information Technology
23	Banco Bilbao Vizcaya Argentaria S.A.	Financials
24	Industria de Diseno Textil S.A.	Consumer Discretionary
25	Iberdrola SA	Utilities
26	Air Liquide SA	Materials
27	Eni S.p.A.	Energy
28	Enel SpA	Utilities
29	Airbus Group SE	Industrials
30	adidas AG	Consumer Discretionary
31	Nokia Oyj	Information Technology
32	Intesa Sanpaolo S.p.A.	Financials
33	Fresenius SE & Co. KGaA	Health Care
34	Munich Reinsurance Company	Financials
35	Orange SA	Telecommunication Services
36	Royal Ahold Delhaize N.V.	Consumer Staples
37	Deutsche Post AG	Industrials
38	Societe Generale S.A. Class A	Financials
39	Essilor International SA	Health Care
40	Royal Philips NV	Industrials
41	CRH Plc	Materials
42	Bayerische Motoren Werke AG	Consumer Discretionary
43	Unibail-Rodamco SE	Real Estate
44	Safran SA	Industrials
45	ENGIE SA	Utilities
46	Volkswagen AG Pref	Consumer Discretionary
47	Compagnie de Saint-Gobain SA	Industrials
48	Vivendi SA	Consumer Discretionary
49	Deutsche Bank AG	Financials
50	E.ON SE	Utilities
51	STT INSTL LIQUID RESERVES STIF USD	Unassigned
52	AIR LIQUIDE SA RIGHT	Unassigned
53	Euro	Unassigned
54	Aperam SA	Materials
55	U.S. Dollar	Unassigned

Source: SPDR

Another way investors can access these European blue chips is to invest in the stocks of these firms individually. With this approach investors can pick and choose the sectors or companies that they want to focus on and avoid the ones they don’t want.

Disclosure: Long Banco Santander SA (SAN), Banco Bilbao Vizcaya Argentaria S.A (BBVA) , E.ON SE (EONGY), AXA Group (AXAHY) and ING Groep N.V. (ING)

Private Consumption as a Percentage of US GDP

Posted by David Hunkar on 24 September 2016, 2:43 pm

Private consumption contributes less to economic decline and recovery than business investment and net exports, according to an article by Ken Fisher of Fisher Investments.

The US economy is a consumer-driven economy with consumer spending accounting for 69% of the GDP. However during economic recessions consumer spending reduces but jumps back quickly than the sharp decline in business investment. So much of the attention of the media is focused on consumer spending it is the business investment that contributes most to recession and recovery.

Private Consumption as a Percentage of US GDP – Chart:

Click to enlarge

Source: Consumers are king: Fisher’s financial mythbusters, Money Observer, June 7, 2016

The above article is another fascinating piece by Mr.Ken busting one of the many financial myths that are often thrown around by everyone.

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The World’s Safest Banks 2016

35 High-Quality European Dividend Stocks

Will E.ON ADR holders Receive Uniper Shares ?

How to Invest in Eurozone Blue-Chip Companies

Private Consumption as a Percentage of US GDP