Kuala Lumpur, Malaysia

Income Inequality Among Select Countries

Posted by David Hunkar on 7 November 2013, 5:21 am

The Gini index measures the degree of inequality in the distribution of family income in a country.The higher the Gini coefficient the higher the income inequality. According to the CIA’s The World Factbook the Scandinavian country of Sweden has the lowest Gini coefficient.The U.S. ranks 41st just behind its former colony of Philippines with a Gini of 45.

Among the developed countries, the U.S. has the highest income inequality between the top and bottom percent of the population. Various factors such as the political structure, form of economy, tax policies, culture, etc. contribute to this situation. The two-party democratic system with politicians selling out to the highest bidder makes the transfer of wealth from the lower section of the population to the elites easier on a daily basis.

The following chart shows the income inequality for select countries:

Click to Enlarge

Source: Halloween: 5 frightful slides on the world economy, CityWire

The top 10% of the population owns over 70% of the wealth in the U.S. The bottom 50% owns less than 5% of the wealth. Extreme levels of income inequality where a few become filthy rich and the majority becomes dirt-poor having to eat grass or starve may lead to revolutions such as the French Revolution. Currently social safety nets such as Medicare, Medicaid, Food Stamps, etc. are keeping millions of Americans from rising up.

Here are a few articles related to this topic:

Wealth, Income, and Power, by Professor by G. William Domhoff

Income Inequality Is the Enemy of Economic Growth: Robert Reich, Yahoo Finance

The Unequal States of America: a Reuters Series, Reuters

Income Inequality Is What’s Destroying America. Forbes

What is income inequality, anyway?, CNN

Inequality – Growing apart, The Economist

Robert Shiller: Income Inequality Is ‘Most Important Problem’, Huffington Post

It’s the Inequality, Stupid, Mother Jones

An interesting chart from the above Mother Jones article:

Some Interesting Facts On Small Countries

Posted by David Hunkar on 6 November 2013, 5:11 am

There are about 200+ countries in the world. Some of them are small with small populations while others are tiny. Their population and economy size are not large enough to get international investors’ attention. In the latest edition of Finance & Development magazine published by the IMF I came across an interesting article on these small states.

The following are some of the notes from that article:

Click to enlarge

Source: Finance & Development, September 2013,IMF

Some microstates such as the island of Seychelles in Asia are rich while others like Samoa, Micronesia are poor.
The Pacific island of Tuvalu has a land area of just 10 square miles which is about one-seventh the size of Washington, DC.
Kiribati has a population of just 100,000 spread over an area of about 3.5 million square kilometers of ocean or about the size of the Indian subcontinent.
The Pacific islands of Samoa and Palau are about as far apart as the east coast of the U.S. and England. This makes communication and trade difficult.
Most the small states depend on tourism, finance or export industries.
Nobel-prize winning economist James Meade predicted the island of Mauritius off the coast of Eastern Africa to be a failure in the 1960s due to its dependence on one commodity – sugar, lack of natural resources and high unemployment. The country proved Meade wrong by diversifying into tourism, finance, textiles, and advanced technology—as well as sugar to grow into a high income country. Mauritius has become an offshore tax haven for wealthy investors to channel funds into other Asian countries such as India, Indonesia, etc.

Is It Too Late To Buy Into European Stocks?

Posted by David Hunkar on 5 November 2013, 1:51 am

European equities have performed well so far this year with most of the major benchmark indices up by double digit percentages similar to the S&P 500. Despite the run up European stocks have more room to grow as most of the economies recover and years of sovereign debt crisis issues are well behind us and not ahead of us. As I have noted in previous articles, European stocks have plenty of room to catch with their American peers. So it is not too late to invest in European companies. Market experts at Charles Schwab emphasized this point in a recent article.

Despite problems, we believe there is an investment case for Europe. Many of Europe’s companies are global, reporting sales in both euros and local currencies. Many of these companies have strong competitive positions in the luxury, technology and industrials industries.

European stocks have room to catch up

Depressed profit margins also contribute to our positive outlook on European stocks. While profit margins in the United States have risen to a 45-year high, margins in the eurozone have declined since the beginning of 2008. If a modest economic recovery continues as we expect, we believe profits could post even higher growth, and help narrow the performance gap between US stocks and European stocks.

Source: Schwab Market Perspective: The Way Things Are…, Charles Schwab

Ten European companies are listed below for further research:

1.Company: Siemens AG (SI)
Current Dividend Yield: 2.31%
Sector: Industrial Conglomerates
Country: Germany

2.Company:D iageo PLC (DEO)
Current Dividend Yield: 2.36%
Sector:Beverages
Country: UK

3.Company:Technip (TKPPY)
Current Dividend Yield: 1.49%
Sector:Energy Equipment & Services
Country: France

4.Company: Aegon NV (AEG)
Current Dividend Yield: 3.11%
Sector: Insurance
Country: The Netherlands

5.Company: Edp Energias De Portugal SA (EDPFY)
Current Dividend Yield: 4.22%
Sector: Electric Utilities
Country: Portugal

6.Company:Air Liquide (AIQUY)
Current Dividend Yield: 2.40%
Sector: Chemicals
Country: France

7.Company: Lafarge SA (LFRGY)
Current Dividend Yield: 1.86%
Sector:Construction Materials
Country: France

8.Company: Danone SA (DANOY)
Current Dividend Yield: 2.57%
Sector:Food Products
Country: France

9.Company: Eni SpA (E)
Current Dividend : 5.83%
Sector:Oil, Gas & Consumable Fuels
Country: Italy

10.Company: National Grid PLC (NGG)
Current Dividend Yield: 5.03%
Sector: Multi-Utilities
Country: UK

Note: Dividend yields noted are as of Nov 4, 2013. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: Long TKPPY

US: An LNG Exporting Country?

Posted by David Hunkar on 4 November 2013, 5:13 am

U.S. Natural Gas production is rising every year since 2006 due to the success of producing shale gas. As the global demand for Liquified Natural Gas (LNG) is projected to grow over the next few years U.S. may become a major exporter of LNG to other countries competing against established played like Qatar and Russia according to a research report by Societe Generale.

Since LNG is currently exported from many countries with political risks, the U.S. will have the advantage of supply diversity.Despite the advantage the authors of the report identify several factors that may prevent the U.S. becoming a major LNG exporter.

From the report:

First, the LNG approval process may prove long and uncertain.Second, the political debate is really a matter of who will collect the rents associated with an abundance of domestic gas resource: the domestic gas producers vs. the domestic manufacturers. Third, current market conditions do not define long-term commerciality. Higher US gas prices and lower Asian gas prices within the next few years are likely to mitigate the profitability of US LNG exports.

Click to enlarge

Source: US: BECOMING A LNG EXPORTER. Societe Generale

The US has overtaken Russia as the leading producer of LNG and is projected to maintain the top spot at least until the end of this decade.

In addition to the US, currently the major natural gas producing countries are Russia, Qatar, Nigeria, Iran, Malaysia, Algeria, Indonesia and Australia.

The following chart the estimated shale gas resources worldwide noting large large technically recoverable resources (TRR):

It should be noted that the US already exports natural gas by pipelines to Mexico and eastern Canada. However companies are now considering exporting it to other countries by super tankers.

Related ETFs:

United States Natural Gas ETF (UNG)
ProShares Ultra DJ-UBS Natural Gas ETF (BOIL)

Disclosure: No Positions

TopForeignStocks.com

Your Money. Your Future.

Knowledge is Power: Blackberry, Great Rotation, Foreign Holders Edition

Income Inequality Among Select Countries

Some Interesting Facts On Small Countries

Is It Too Late To Buy Into European Stocks?

US: An LNG Exporting Country?