Africa’s Electricity Deficit

Posted by on

Africa requires massive investments in power generation to meet its demand. According to an article by Dr.Mark Mobius  the continent has only 7% of the power generating capacity of the U.S. This fact is astonishing since Africa is blessed with plenty of natural resources such as water, solar energy, oil, etc.

Click to enlarge

Africa Electricity Deficit

From the article:

Using per-capita data, a US citizen on average uses 12,461 kilowatt hours of electricity per annum; a citizen of Ethiopia uses 52. On average, only 30% of Sub-Saharan Africa citizens have any access to electric power,2 and even where power is available, provision can be sporadic, with frequent power cuts and “brown-outs.” One of my trips to Nigeria was enlivened by a power cut that unexpectedly left us stranded in the elevator at one of Lagos’s most prestigious hotels. For factories and hospitals, such interruptions can be more than inconveniencing.

If the challenge posed by Africa’s electric power deficit is monumental, so is the effort currently going into addressing the problem. Many of the most dramatic projects relate to harnessing the potential of Africa’s great rivers. Chinese firms utilizing skills built up during China’s program of dam building and electricity generating-plant expansion are prominent in many of the schemes. The Ethiopian government has been particularly active in this area, with major projects involving most of the rivers flowing through the country, headed by a plan to dam the Blue Nile that could potentially generate six gigawatts of power. Uganda, Mozambique and Ghana are also among countries that have major hydroelectric schemes under way or planned. But the largest of all is the Inga Falls Number Three project on the Congo River in the Democratic Republic of Congo, initially intended to generate 4.8 gigawatts, but with a potential ultimate generating capacity in excess of 40 gigawatts.3

2. Source: ©OECD/IEA, 2014, Africa Energy Outlook, A Focus on Energy Prospects in Sub-Saharan Africa, World Energy Outlook special report, IEA Publishing. Licence http://www.iea.org/t&c/termsandconditions/

3. Source: International Rivers.Org, Grand Inga Dam, DR Congo.

Source: Africa’s Electrifying Future, Jan 16, 2015, Mark Mobius, Franklin Templeton Investments

Five Facts about the FTSE 100 Index

Posted by on

On Tuesday Feb 24th, UK’s benchmark Index the FTSE 100 closed at 6949.63 surpassing the peak it last reached 15 years ago during the dot-com boom. It took the index an astonishing decade and half to regain this level.

Click to enlarge

FTSE 100 Record High Chart

Source: As FTSE Hits a Record, Scratch Beneath the Surface, Moneybeat, The Wall Street Journal

Here are five interesting facts about the FTSE 100:

  1. The index is made up of the 100 largest companies by market capitalization listed on the London Stock Exchange.
  2. Though the index is highly popular it is not a good barometer of the British economy since companies in the index earn 75% of their revenues from abroad.
  3. According to research by Hargreaves Lansdown, the same companies lead the index now as in 1999:FTSE Leading Companies
  4. Mining and oil companies make up about a fifth of the FTSE 100. These firms earn most of their revenues from emerging markets.
  5. The FTSE 100 index is calculated excluding dividends. Germnay’s DAX includes dividends. The chart below shows the performance of FTSE 100, DAX and Japan’s Topix including dividends:

Click to enlarge

FTSE DAX including dividends

 

Sources:

After 15 Years, FTSE Climbs to a Record, The Wall Street Journal

FTSE 100 hits 15-year highs, but it’s no time to sell, MoneyWeek

Five How to play Footsie, FT Alphaville

Related ETF:

  • iShares MSCI United Kingdom (EWU)

You can also check out the list of British ADRs trading on the US markets.

Disclosure: No Positions

Update:

Click to enlarge

FTSE100-FTSE-250

Despite its wide acclaim, the FTSE 100 index has actually been a pretty poor performer over this 15 year time period. Most other major stock market indices such as the S&P 500 in the U.S. have outperformed the FTSE 100. The FTSE 250 index which consists of smaller market capitalisation companies has trounced the FTSE 100, rising nearly 170% over this period. Part of the underperformance of the FTSE 100 can be explained by its higher dividend yield, but even adjusting for this there is no getting away from the conclusion that the index has been a laggard.

Source: A tale of three sectors, Feb 24, 1015, Allianz

Updates:

The 48 Largest Metropolitan Economies in China

Posted by on

The map below shows the Largest Metropolitan Economies in China 2013-14:

Click to enlarge

Largest Metropolitan Cities in China

According to a report by The Brooking Institution, two-thirds of metro areas in China ranking among the fastest growing group among the 300 largest metropolitan areas worldwide. The GDP of the Chinese metropolitan regions vary widely with Shanghai at $594 billion to Shantou at $39 billion.

The seven largest metro areas comprising of Shanghai, Beijing, Guangzhou, Tianjin, Shenzen, Suzhou and Chongqing alone account for 20% of the national economy.

Source: Global Metro Monitor 2014, The Brooking Institution

The Periodic Table of Emerging Markets 2005 To 2014

Posted by on

I posted the Periodic Table of Investment Returns for Commodities for 2015 last month. Here is the chart for Emerging Markets from 2005 to 2014:

Click to enlarge

The Periodic Table of Investment Returns for Emerging Markets 2005 to 2014

Source: US Funds

A few observations:

  • The best performing emerging market last year was India with a return of over 29%. This year India’s Sensex is up a decent 5.51% year-to-date.
  • Russia was the worst performer with a loss of over 42%. With Ukraine crisis still ongoing and the Russian economy adversely impacted from lower oil prices its best to avoid Russian stocks this year.
  • Global investors’ attraction towards Brazil has disappeared in the past few years. In 2009, Brazil returned about 145%. Since then it has declined every year except in 2010 when it returned a mere 5%. With Petrobras (PBR) mired in corruption investigations and oil prices remaining low, investors may want to be very cautious of Brazilian stocks this year.

Also checkout: The Periodic Table of Emerging Markets 2004 To 2013

Disclosure: Long PBR

DAX Reaches a New Record High

Posted by on

Germany’s benchmark index DAX reached an all-time record high of 11,158.55 yesterday on intraday basis before closing the day at a record 11,130. The index reached another high on Friday.

In addition to DAX, UK’s FTSE 100 also came close to reaching 6,950 which it first crossed in late 1999. The FTSE has now hit a 15-year high this week. Though it seems like the index is only now recovering all the losses since 1999, in reality the index is up 66% as of Feb 20th if dividends are included in the calculation according to an article in Citywire, UK.

As the economic powerhouse of Europe, it is not surprising to see German stocks are leading the way in Europe.

The following chart shows the yearly performance of DAX for the selected period:

DAX-Index-Return-by-year 1955 to 2012

How to invest in German stocks?

A simple and easy to invest in German stocks is via the iShares MSCI Germany ETF (EWG) . Another option to is to consider the closed-end fund New Germany Fund Inc. (GF). For investors interested in individual companies, many German ADRs trade on the US markets. A list of German ADRs can be found here.

Disclosure: No Positions

Related:

Here’s what the FTSE 100’s near-record high can teach you about investing, MoneyWeek