Six Investment Opportunities South of the Border

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US equity investors looking for growth stocks can consider opportunities south of the border, Though Mexico is usually avoided by the investment community due to political risk, violence, etc. there are many factors that favor investment in the country’s equity markets. For example, unlike other Latin American economies such as Brazil or Chile, Mexico’s economy is not dependent on commodities and is highly related to the US economy.So when the US economy grows Mexican economy also expands. Due to a strong manufacturing sector and a growing middle class Mexico is on par with other fast growing economies.

The benchmark IPC All-Share Index is ahead of the S&P 500 with a gain of over 9% year-to-date.

Listed below are six Mexican stocks trading on the US markets:

1.Company: Coca-Cola Femsa SAB de CV (KOF)
Current Dividend Yield: 3.86%
Sector: Beverages

2.Company: Grupo Aeroportuario del Centro Norte SAB de CV (OMAB)
Current Dividend Yield: 10.30%
Sector: Airport Operator

3.Company: Grupo Aeroportuario del Pacifico SAB de CV  (PAC)
Current Dividend Yield: 2.82%
Sector: Airport Operator

4.Company: Grupo Aeroportuario del Sureste SAB de CV  (ASR)
Current Dividend Yield: 1.94%
Sector: Airport Operator

5.Company: Fomento Economico Mexicano SAB de CV (FMX)
Current Dividend Yield: 1.52%
Sector: Beverages

6.Company: Kimberly-Clark de Mexico SAB de CV (KCDMY)
Current Dividend Yield: 3.78%
Sector: Household Goods

The three airport operators have excellent growth potential due to the high tourist traffic flowing to Mexico’s beach destinations. Unlike airlines airport operators have high profit margins and have a variety of revenues sources such as car parking lots, shops, restaurants, advertisements, etc.

Note: Dividend yields noted above are as of Aug 4, 2016. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: No positions

Click to enlarge

Cancun-Beach in Mexico

A beach in Cancun, Mexico

Deutsche Bank and Credit Suisse Kicked Out of BlueChip Stoxx Europe 50 Index

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Deutsche Bank(DB) and Credit Suisse(CS) are getting kicked out of the prestigious Stoxx Europe 50 Index. The changes will come into effect at the market open on August 8, 2016 according to the index provider STOXX. These two components will be replaced by French construction ginat Vinci (VCISY) and chipmaker ASML Holding(ASML) of The Netherlands.

The five-year price return (in Euros) of the Stoxx Europe 60 Index is shown below:

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Stoxx Europe 50 Index 5 Years

Source: STOXX

The change is the index components has a big impact on all the products such as ETFs that track this index.

DB and CS have lost nearly half of their value this year based on stock prices. For Deutsche Bank this is the first time since 1998 that it is not part of the bluechip index.

The stocks of most of the major European banks have declined heavily so far this year. So from an investment perspective, investors can avoid British banks and others including DB,.

Disclosure: No Positions

UK FTSE 100 Index Returns By Year

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The FTSE 100 Index is the benchmark index of the UK equity market. It contains 100 companies with the highest market capitalization.

The FTSE 100 Index Returns By Year from 1985 thru 2015 are shown in the chart below:

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UK FTSE 100 Index Annual Returns

The FTSE 100 Index Returns By Year from 1985 thru 2015 are shown in the table below:

YearUK FTSE 100 Index Price Return
198514.7%
198618.9%
19872.0%
19884.7%
198935.1%
1990-11.5%
199116.3%
199214.2%
199320.1%
1994-10.3%
199520.3%
199611.6%
199724.7%
199814.5%
199917.8%
2000-10.2%
2001-16.2%
2002-24.5%
200313.6%
20047.5%
200516.7%
200610.7%
20073.8%
2008-31.3%
200922.1%
20109.0%
2011-5.6%
20125.8%
201314.4%
2014-2.7%
2015-4.9%

Data Source: FTSE Indices since 1985, Swanlowpark

Download Data:

Related ETF:

  • iShares MSCI United Kingdom ETF (EWU)

Disclosure: No Positions

The Composition of India GDP

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The Indian economy is a $2.0 Trillion economy . In terms of global economic sizes, India represents just over 3% of the world economy. In 1991, India opened up its previously closed economy leading to tremendous growth in the years since. One of the sector that has grown strongly since the liberalization of the economy is the service sector.According to the latest data available, the service sector accounts for about 64% of the GDP. Agricultural and related services amount to only 15% of the Indian economy.

The  Composition of India GDP

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India GDP Composition

Source: Tracking progress in numbers, The Hindu Business Line, July 24, 2016

Two Solid Reasons To Own Singapore Stocks

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US investors looking to gain exposure to Asian equities should consider investing in Singapore. Unlike its neighbor Malaysia, the country is a well developed with a GDP per capita comparable to wealthy developed countries. Though China is a major trading partner, Singapore is diversified in terms of exports and imports with other major countries including the U.S.

For American investors Singapore is an excellent destination to find investment opportunities. Two of the reasons for investing in Singapore stocks are listed below:

1.Singapore stocks have the second highest dividend yield among Asian countries as shown in the following graph:

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Singapore Dividend Yield vs Asian Countries

Source: Nikko AM Singapore Dividend Equity Fund: Our First ASEAN CIS Passport Fund On Board! by  Lee Tien Xiang, Nikko AM

Only Australia offers higher dividend yields than Singapore in Asia. In addition, the market has gained a cumulative total return of 27.6 % over the past 5 years as of April 1st this year.

2.Singapore is one the few developed countries that charges no withholding taxes on dividends paid to foreign investors. Hence investors will receive the full dividend amounts paid by Singapore corporations.

Five Singapore stocks are noted below with their current dividend yields for further research:

1.Company: DBS Group Holdings Ltd (DBSDY)
Current Dividend Yield: 3.77%
Sector: Banking

2.Company: United Overseas Bank Ltd (UOVEY)
Current Dividend Yield: 3.66%
Sector: Banking

3.Company: Singapore Telecom (SGAPY)
Current Dividend Yield: 5.57%
Sector: Telecom

4. Company:Keppel Corp (KPELY)
Current Dividend Yield: 6.24%
Sector:  Industrial Conglomerate

5.Company: Singapore Airlines Limited (SINGY)
Current Dividend Yield: 2.40%
Sector: Airlines

Note: Dividend yields noted above are as of June 29, 2016. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: No Positions