Knowledge is Power: Buy and Hold, Mutual Fund Lesson, Fintechs Edition

Posted by on

SpaceWalk

Astronaut  Steve Robinson on the International Space Station doing work in a damn office cubicle 

Courtesy: Wikipedia

Notes on the Myanmar Stock Market

Posted by on

Myanmar can be considered as one of the latest entrant to the category of frontier markets. For many decades the country formerly known as Burma was a closed economy run by a military junta. After many elections and years of waiting the Burmese yearning for democracy is slowly taking shape as Myanmar open its economy to domestic and foreign investors. Burma used to be famous for its high-quality rice, teak wood, precious gems, etc.

Myanmar’s stock exchange started trading on March 25, 2016. The Yangon Stock Exchange(YSX) opened for business with just one listing.  From a Deutsche Welle article:

“We can now proudly and mightily proclaim to the world that we are no longer a backward nation,’ Maung Maung Thein, the head of Myanmar’s Securities and Exchange Commission, told a group of business elites who had gathered at the Yangon Stock Exchange’s refurbished colonial-era headquarters in downtown Yangon.

Here are few facts about the stock market of Myanmar:

  • Only one company is listed on the exchange. First Myanmar Investment Co, known as FMI, is a conglomerate operating in financial-services, real-estate and health-care industries. After the first day of trading, FMI had a market cap of $598 million.
  • FMI has a sister firm that is listed in Singapore.
  • Cambodia’s stock exchange opened in 2012 and has only three firms listed.
  • Five companies trade on the Laos stock exchange.
  • Regional markets such as Thailand and Vietnam have 517 and 307 firms listed.

Relevant websites:

Sources: 

Yangon Stock Exchange

Yangon Stock Exchange, Yangon, Myanmar

Why Australia Is Attractive For Dividend Stock Investors

Posted by on

The Australian equity market is under-performing this year with the benchmark S & P/ASX 200 down 5.5% year-to-date. Australian stocks have been bit due to the ongoing slowdown in China. As Australia is a major trade partner of China primarily exporting commodities, the slowdown in Chinese economy has adversely impacted Australia.

Though Australian stocks are down this year, income investors with a long-term horizon of 5 years or more can take advantage of the lower prices and accumulate shares at current levels.

Some of the reasons to buy and hold Australian dividend stocks are listed below:

  • Australia has the highest dividend yield among major equity market as shown in the chart below:
  • Click to enlarge
  • Dividend Yields-Australia vs Other COuntries
  • At 5.5%, the yield is more than double that of the S&P 500 is around 2%.
  • Dividend payouts by Australian firms are some of the highest in the world. The following chart shows the historical dividend payout ratio:

Australia Payout Ratio

  • Australian firms did not cut their dividends aggressively even during the global financial crisis.
  • Banks and insurers are steady and consistent dividend payers.
  • In the banking sector, Commonwealth Bank of Australia, Australia & New Zealand Banking Group Ltd. and Westpac Banking Corp are projected to increase payouts this financial year.
  • Unlike other developed countries, Australia has not implemented Quantitative Easing (QE) programs. This is positive for the currency and the economy as a whole in the long-term.
  • Australian tax system encourages the payment of dividends and does not ding investors with double taxation of dividends.

Five Australian stocks trading on the US markets are listed below with their current dividend yields for further research:

1.Company: Westpac Banking Corp (WBK)
Current Dividend Yield: 5.88%
Sector:Banking

2.Company: Australia and New Zealand Banking Group Ltd (ANZBY)
Current Dividend Yield: 7.31%
Sector:Banking

3.Company: Telstra Corp Ltd (TLSYY)
Current Dividend Yield: 5.56%
Sector:Telecom

4.Company: National Australia Bank Ltd (NABZY)
Current Dividend Yield: 7.39%
Sector:Banking

5.Company:Commonwealth Bank of Australia (CMWAY)
Current Dividend Yield: 7.84%
Sector: Banking

Sources: 

Australian Stocks’ Worst-Ever Start Has Investors Eyeing Payouts, Bloomberg, Jan 12, 2016

Martin Currie Investment

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

Disclosure: Long NABZY and WBK

On The Current State Of German Households

Posted by on

The media and the certain sections of public generally focus on macro economic indicators such as GDP in order to discuss the well-being of a country. But how do all the over-hyped figures such as the GDP, GDP Growth Rate, etc. impact the average person on Main Street is important. For instance, the US economy is the largest in the world at over $16.0 Trillion and the GDP per capita is over $53,000. These figures do not mean much when the number of people surviving on food stamps is growing, wages are stagnant, people are unhappy, debt levels are soaring again, crime rates are increasing, etc. In this post, lets take a look at three charts on the current state of households in Germany. Looking at data at the household level shows the real impact of economic growth or lack there of based on a report by the OECD.

1. German Real GDP and Real Household Disposable Income per Capita:

Click to enlarge

German Real GDP and Real Houseehold Disposable Income per Capita
The above chart shows the development of real GDP per capita and real household disposable income per capita since the first quarter of 2007.Both the figures have steadily increased over the years which is good for the economy as a whole.

2. German Household Savings Rate:

German Household Savings Rate

Germans are big savers and not spenders. Unlike the US economy which is a consumption-based  Germany’s economy is export-driven. The household savings rate in Germany was 16.9% in 3Q, 2015 and the average rate is 16.7. The rate is not only high among OECD nations but also highly stable. The latest US personal saving rate is just 5.2% according to St.Louis Fed.

3.German Households’ Indebtedness:

German Households Indebtedness

The chart shows a consistent decline in the indebtedness of German households. One does not need a Ph.D in Economics to understand that lower debt levels are a big positive factor for households.

4. German Unemployment Rate:

German Unemployement RRate

High unemployment rates lead to distressed households. The German unemployment rate stood at 4.6% in 3Q, 2015 the lowest level since 1991. In January, the rate has dipped further to 4.3% according to DeStatis.

Source: A dash of data: Spotlight on German households, OECD Insights

The Stock Market Cycle

Posted by on

The behavior of stock market tends to follow a cycle.Similar to many conditions of an economy such as expansion, contraction, stagflation, etc. stock markets also go thru periods of booms followed by bust.

The following is an interesting chart by Liz Ann Sonders at Charles Schwab. According to an article by Liz, the stock market tends to have four cycles.

Click to enlarge

Stock Market Cycle

 

From the article:

The stock market has familiar cycles dating back to at least the 1960s. The visual below (and the accompanying detailed set of tables below that) highlights these cycles and their direction. Each box in the graphic below shows the median return and duration for the seven of these cycles we’ve seen since 1968; but also the return and duration for the most recent phase of the current cycle. The cycles utilize the bull and bear market definitions pioneered by Ned Davis Research (NDR), which are more nuanced than the simple +20%/-20% traditional definition.

The full article is worth a read.

Source: Echo: Are Stocks Getting Back in Cycle? by Liz Ann Sonders, Charles Schwab