Performance Comparison: Ecopetrol vs Petrobras

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Oil majors Ecopetrol (EC) of Colombia and Petrobras(PBR) of Brazil are both controlled by the state. In the past 5 years the ADR performance of these companies have diverged significantly as shown in the chart below:

Click to enlarge

EC vs PBR-5 year return

Source: Google Finance

Petrobras had a great run in the past. However the stock has performed poorly especially during the presidency of during the Dilma Vana Rousseff since 2011. The populist president has a been a disaster for investors due to her policies of heavy state intervention in the economy.

Ecopetrol is up 82% in the past five years in price returns while Petrobras is down over 50%. EC currently has a 7.75% dividend yield and a market cap of $73.0 billion while PBR’s dividend yield is 1.52% and market cap is $81.0 billion.

Ecopetrol(EC) ADR fell by 42% in 2013 and Petrobras(PBR) was down 31%. Petrobras has been on a downtrend for many years now.From a peak of $72.0 reached in June 2008 following a 2 for 1 split in May of that year, the stock currently trades at under $13.0. Investors who bought in 2008 are sitting on a big paper loss. From its IPO in 2008, Ecopetrol shares peaked at around $68.0 in May 2012. On Friday it closed at $35.56. The company has paid a dividend every year since its listing on the NYSE.

According to an article in FT beyondbrics blog, Ecopetrol has a extraordinary shareholder meeting set for January 23. There are rumors that Javier Gutiérrez, the chief executive of the company may be on the way out. Despite new discoveries Ecopetrol seems to be suffering from tight reserves according to bank Bancolombia quoted in the article.

Disclosure: Long PBR

The FTSE 100 At Thirty: Then and Now

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The FTSE 100 turns thirty this year. With a base level of 1000, it was launched in January 1984 as a broader measure of the corporate British economy.

The chart below shows the performance of the index over the past 30 years:

Click to enlarge

FTSE100_thirty_years

Source: FTSE 100 turns thirty, Fidelity UK

On Friday the FTSE 100 closed at 6,829.30.

A few points of interest from the Fidelity article are listed below:

  • In the first 17 years of its existence the FTSE had strong returns. But this could not be repeated in the next 13 years.
  • The Footsie came just in time to capture the investing mood of a generation when wide-scale privatization of state industries led millions of Britons to own shares in the years that followed.
  • By some measures the index does not represent the broad British economy. For example, Persimmon is the only UK home builder in the index whereas the next seven large builders are in the FTSE 250 index.
  • The FTSE also suffers from “survivor bias” since failing companies are routinely booted out and replaced by successful firms.
  • The original constituents of the FTSE 100 reflected Britain as a manufacturing powerhouse with long-established names such as BICC (electrical cables) Courtaulds (textiles) and TI Group (steel tubing) among them.
  • Some of the original constituents such as BP (BP), Marks & Spencer(MAKSY) and Unilever(UL) are still in the index today.

The table below shows the original members of the FTSE 100 in 1984 and what happened to them:

S.No.Original MemberWhat happened to it
1Allied-LyonsAcquired
2Associated British Foods (LSE: ABF)
3Associated DairiesAcquired
4British American Tobacco (LSE: BATS)
5BICCBalfour Beatty
6BOCAcquired
7BPB IndustriesAcquired
8BTRNow called Invensys (LSE: ISYS)
9Barclays (LSE: BARC)
10Barratt DevelopmentsNow in the FTSE 250
11BassBroken up
12BeechamAcquired
13Berisford (S&W)Acquired
14Blue Circle IndustriesAcquired
15BootsAcquired
16British AerospaceNow called BAE Systems (LSE: BA)
17British & Commonwealth ShippingBankrupt
18British Electric TractionAcquired
19British Home StoresAcquired
20BP (LSE: BP)
21BritoilAcquired
22BowaterNow called Rexam (LSE: REX)
23BurtonAcquired
24Cable & Wireless (LSE: CW)
25Cadbury SchweppesNow just Cadbury (LSE: CBRY)
26Charterhouse J. RothschildBroken up
27Commercial Union AssuranceNow called Aviva (LSE: AV)
28Consolidated Gold FieldAcquired
29CourtauldsAcquired
30DalgetyBroken up
31DistillersAcquired
32Edinburgh Investment TrustNow in the FTSE 250
33English China ClaysAcquired
34Exco InternationalAcquired
35FerrantiBankrupt
36FisonsAcquired
37General Accident Fire & LifeAcquired
38General ElectricAcquired
39GlaxoNow called GlaxoSmithKline (LSE: GSK)
40Globe Investment TrustAcquired
41Grand MetropolitanMerged with Guinness, now called Diageo (LSE: DGE)
42GUSBroken up
43Guardian Royal ExchangeAcquired
44Guest, Keen & NettlefoldsNow just GKN (LSE: GKN) and in the FTSE 250
45Hambro Life AssuranceAcquired
46Hammerson (LSE: HMSO)
47Hanson TrustAcquired
48Harrisons & CrosfieldElementis/FTSE Small Cap
49Hawker SiddeleyAcquired
50House of FraserAcquired
51ICIAcquired, but demerged AstraZeneca (LSE: AZN) in 1993.
52Imperial Continental GasBroken up
53ImperialNow Imperial Tobacco (LSE: IMT)
54Johnson Matthey (LSE: JMAT)
55LadbrokesNow in the FTSE 250
56Land Securities (LSE: LAND)
57Legal & General (LSE: LGEN)
58Lloyds BankNow Lloyds Banking Group (LSE: LLOY)
59MEPCAcquired
60MFI FurnitureBankrupt
61Magnet & SouthernsAcquired
62Marks & Spencer (LSE: MKS)
63Midland BankAcquired
64National Westminster BankAcquired
65Northern FoodsNow in the FTSE 250
66Pearson (S) & SonNow called Pearson (LSE: PSON)
67Peninsular & Oriental SteamAcquired
68Pilkington BrothersAcquired
69PlesseyAcquired
70Prudential AssuranceNow just Prudential (LSE: PRU)
71RMCAcquired
72Racal ElectronicsAcquired, although demerged Vodafone (LSE: VOD) in 1988.
73Rank OrganisationAcquired
74Reckitt & ColmanNow called Reckitt Benckiser (LSE: RB)
75RedlandAcquired
76Reed InternationalNow called Reed Elsevier (LSE: REL)
77Rio Tinto-ZincNow called Rio Tinto Group (LSE: RIO)
78Rowntree-MackintoshAcquired
79Royal Bank of Scotland (LSE: RBS)
80Royal InsuranceNow called RSA (LSE: RSA)
81J Sainsbury (LSE: SBRY)
82Scottish & Newcastle BreweriesAcquired
83SearsBroken up
84SedgwickAcquired
85Shell Transport & TradingNow called Royal Dutch Shell (LSE: RSDB)
86Smith & Nephew (LSE: SN)
87Standard Chartered (LSE: STAN)
88Standard Telephone & CableAcquired
89Sun Alliance & London InsuranceAcquired
90Sun Life Assurance SocietyAcquired
91TarmacAcquired
92Tesco (LSE: TSCO)
93Thorn EMIAcquired
94Trafalgar HouseAcquired
95Trusthouse ForteAcquired
96UltramarAcquired
97Unilever (LSE: ULVR)
98United BiscuitsAcquired
99Whitbread (LSE: WTB)
100George WimpeyNow called Taylor Wimpey (LSE: TW) and in the FTSE 250

 

Data Source: Motely Fool, UK

The history of the FTSE 100 constituent changes over the years can be found here.

Unlike the original FTSE, the current version is composed of fewer manufacturing firms.The FTSE 100 currently is dominated by banking, mining and energy firms.Today it is a market-capitalisation weighted index of UK-listed blue chip companies measuring the performance of the 100 largest companies traded on the London Stock Exchange that pass screening for size and liquidity.

The dividend yield of the index stood 3.46% at the end of 2013 (in local currency terms) and the top 10 constituents accounted for about 43% of the index market capitalization.

The Top Five Constituents of the Index are listed below with their current dividend yields:

1.Company: HSBC Holdings (HBC)
Current Dividend Yield: 4.31%
Sector: Banking

2.Company:Vodafone Group (VOD)
Current Dividend Yield: 4.05%
Sector: Telecom

3.Company: BP Plc (BP)
Current Dividend Yield: 4.54%
Sector:Oil & Gas Producers

4.Company: Royal Dutch Shell A (RDS-A)
Current Dividend Yield: 4.29%
Sector:Oil & Gas Producers

5.Company: GlaxoSmithKline (GSK)
Current Dividend Yield: 4.38%
Sector:Pharmaceuticals & Biotechnology

The full list of FTSE 100 can be found here.

Note: Dividend yields noted above are as of Jan 17, 2014. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Source: FTSE

The iShares MSCI United Kingdom ETF (EWU) which tracks the MSCI United Kingdom Index gives exposure to some of the large British firms. It has a 12-month yield of 2.40%.

Disclosure: No Positions

Update:

The changing face of the FTSE 100, CityWire UK

How Big Are Equity Markets In Emerging Countries?

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Stock markets in developing countries are small in terms of market capitalization compared to their peers in the developed world. The latest issue of The Economist has the following graphic on emerging market equities:

Click to enlarge

Emerging Market Shares

Source: Shares in emerging markets Scarce, The Economist

It should be noted that only the freely traded shares that feature in the local MSCI share index is used for calculating the market capitalization. This graphic does not represent the market capitalization of the all the companies listed in a particular country.According to the Economist note, all the shares available in India are worth roughly equal to Nestle. Similarly all the shares available in Egypt are equal to Burger King.Currently Nestle (NSRGY) and Burger King Worldwide (BKW) have a market capitalization of about $238.0 billion and $8.0 billion respectively.

For a better comparison of I reviewed market capitalization data from the World Federation of Exchanges. The table below shows the domestic total market caps of select emerging and frontier markets in US dollar terms at the end of 2013:

ExchangeDomestic Market Capitalization (in USD Billions)Percentage Change from Dec 2012 (in USD)Percentage Change from Dec 2012 (in local currency)
Americas
Bermuda SE--
BM&FBOVESPA1,020.46-16.9%-4.2%
Buenos Aires SE53.1055.0%105.5%
Colombia SE202.69-22.7%-15.4%
Lima SE80.98-21.1%-13.5%
Mexican Exchange526.020.2%1.0%
NASDAQ OMX6,084.9732.8%32.8%
NYSE Euronext (US)17,949.8827.4%27.4%
Santiago SE265.15-15.4%-7.1%
TMX Group2,113.822.7%9.6%
Total region28,297.0722.0%
Asia - Pacific
Australian SE1,365.96-1.5%14.3%
BSE India1,138.83-9.9%1.8%
Bursa Malaysia500.397.2%14.9%
Colombo SE18.8110.8%13.5%
GreTai Securities Market78.0030.3%33.8%
Hong Kong Exchanges3,100.789.5%9.5%
Indonesia SE346.67-19.0%2.2%
Japan Exchange Group - Osaka--
Japan Exchange Group - Tokyo4,543.1730.6%58.7%
Korea Exchange1,234.554.7%3.2%
National Stock Exchange India1,112.95-9.8%1.8%
Philippine SE217.32-5.2%2.4%
Shanghai SE2,496.99-2.0%-4.7%
Shenzhen SE1,452.1526.3%22.7%
Singapore Exchange744.41-2.7%0.6%
Taiwan SE Corp.822.7111.9%14.8%
The Stock Exchange of Thailand354.34-9.1%-2.3%
Total region18,415.088.8%
Europe - Africa - Middle East
Abu Dhabi SE109.6461.4%61.3%
Amman SE25.76-4.5%-4.7%
Athens Exchange70.1956.4%49.6%
BME Spanish Exchanges1,116.5612.2%7.4%
Borsa Istanbul195.75-37.9%-25.2%
Budapest SE19.80-4.6%-6.9%
Casablanca SE53.832.6%-1.0%
Cyprus SE2.105.5%0.9%
Deutsche Börse1,936.1130.3%24.6%
Egyptian Exchange61.634.1%13.7%
Irish SE170.1256.1%49.3%
Johannesburg SE942.813.9%28.2%
Ljubljana SE7.1310.1%5.3%
London SE Group4,428.9830.4%24.8%
Luxembourg SE78.6411.8%7.0%
Malta SE--
Mauritius SE8.9424.5%22.5%
Moscow Exchange770.66-6.6%0.4%
Muscat Securities Market36.7721.4%21.3%
NASDAQ OMX Nordic Exchange1,269.2127.5%22.0%
NYSE Euronext (Europe)3,583.9026.5%21.1%
Oslo Børs265.389.3%19.2%
Saudi Stock Exchange - Tadawul467.3725.2%25.2%
SIX Swiss Exchange1,540.7024.9%21.4%
Tel Aviv SE203.3025.6%16.9%
Wiener Börse117.6711.0%6.2%
Total region17,482.9521.6%
WFE Total64,195.1017.8%

Notes:

  • Johannesburg SE: figures include the market capitalization of all listed companies, but exclude listed warrants, convertibles and investment funds
  • BME: Including investment companies listed (open-end investmetnt companies) that differ from investment funds included in table 1.3.2 because of their legal status and that cannot be distinguished from other listed companies. 
  • Australian SE: including investment funds
  • JPX – Osaka SE: On 16 July 2013, Osaka SE cash equity products were listed on Tokyo SE
  • JPX – Tokyo SE: On 16 July 2013, Osaka SE cash equity products were listed on Tokyo SE
  • Korea Exchange: includes Kosdaq market data
  • Mauritius SE: From Aug. 2006, data includes Development & Enterprise Market
  • NASDAQ OMX Nordic Exchange : OMX includes Copenhagen, Helsinki, Iceland, Stockholm, Tallinn, Riga and Vilnius Stock Exchanges
  • Singapore Exchange: market capitalization includes domestic listings and a substantial number of foreign listings, defined as companies whose principal place of business is outside of Singapore. Inactive secondary foreign listings are excluded.
  • TSX Group: also includes TSX Venture market cap
  • Total excludes Osaka and National Stock Exchange of India to avoid double counting with Tokyo and Bombay SE respectively

Source : World Federation of Exchanges members

Data Source: World Federation of Exchanges

The NYSE had a market cap of about $18.0 Trillion. Together with the NASDAQ the total US market cap was about $24.0 Trillion. This figure includes all the stocks (including those of foreign companies) listed on these markets.

In comparison, the Mexico had a market cap of $526 billion.Brazil was almost double that of Mexico’s with a total of just over $1.0 Trillion. India’s market cap came in at about $1.1 Trillion. China’s Shanghai Stock Exchange had a total market cap of about $2.5 Trillion and Russia’s figure stood at about $770 billion. China had the top market cap among the BRICs.

Canada’s TSX had a higher market cap than Australia’s $1.3 Trillion.

Disclosure: No Positions

Obesity Rates For Adults Across Countries

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Obesity is increasingly becoming an problem around the world. It is particularly high in developed countries compared to developing countries. In the U.S.,  the obesity epidemic adds billions of dollars in healthcare costs. Relatively very cheap food prices, lethargic lifestyle, high dependence on automobile for transport, high consumption of genetically modified foods, high amounts of all types of chemicals added to food products, high meat consumption, etc. are some of the causes of obesity among Americans. For the privilege of being able to eat $0.99 burgers to dead cheap prices for sugar to unlimited refills for soft drinks in restaurants Americans pay a heavy price in terms of medical expenses and of course the pain and suffering that goes with ailments.

The chart below shows the percentage of adult population that are obese for select countries:

Click to enlarge

Obesity Rates For Adults By Country

 

Source: Sugar – Consumption at a crossroads, Credit Suisse

The number of calories needed for the average male is 2500 according to UK’s National Health Service (NHS). The U.S. government recommends 2700 calories. The actual consumption is much higher in virtually all countries. It peaks at 3700 calories per adult per day in the US according to the Credit Suisse report.

The report also noted that while sugar alone is not the cause of the obesity epidemic it is one of the major contributors.