The energy sector comprising mostly the oil industry is a major sector of the economy in certain markets than others. For example, in many emerging markets the oil companies dominate the economy. Firms such as Petronas of Malaysia, Statoil of Norway, Lukoil and others of Russia, etc. dominate the respective local economies in terms of revenue and earnings.

According to a report by Deutsche Bank, investors in 2015 have to consider the importance of energy sector to a market index when making their decisions. The following chart the share of the energy sector in the local stock market’s benchmark index:

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Source: CIO View Special, Feb 2015, Deutsche Asset & Wealth Management

From the report:

Since the major stock indices overweigh the energy sector compared to its economic significance, a lower oil price can result in lower aggregate index gains, even in an environment of GDP growth. Every oil-price decline by $10/b is likely to lower S&P 500 Index and STOXX Europe 600 Index gains by 1%.

The benchmark indices of Russia and Norway have very high concentration of the energy sector. Some of the large Russian oil firms include LUKOIL (LUKOY), Gazprom (OGZPY) and Rosneft Oil Company (OJSCY). Norway’s Statoil (STO) is the largest oil firm in the country and is also a major global player in the industry. Though the price of Statoil ADR has fallen to about $19 now due to collapse of oil prices, still the firm has a respectable market cap of about $60.0 billion. Brazil’s Petrobras (PBR) has become a fallen angel due to the corruption scandal but seems to be on the mend this year.The ADR has nicely jumped from under $5 a share recently to close at $7.75 yesterday.

The U.S. economy is highly diversified and the S&P 500 reflects that. The energy industry accounts for just 8% of the index as the graph shows below:

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Source: S&P

Since the S&P 500 highly diversified the index has not tanked heavily despite the dramatic plunge in oil prices in the past few months.

The key takeaway for investors from this post is that the equity markets of countries with high oil industry concentration will be affected by the movement of oil prices. For instance, the Russian economy and the RTS index will bounce sharply should oil prices recover strongly this year.

Disclosure: Long PBR

Every year highly-skilled foreign workers compete to enter the U.S. via the H1-B visa program. April 1st week is the H1B visa cap season. Currently this program has a cap of 85,000 per year. In the past few years, the demand for these visas has far exceeded the supply. Hence a lottery has been designed if the number applications filed exceeds the 85K limit in the first week of April. Both companies and workers alike clamor for this highly coveted visas.

The following table shows the top metropolitan regions with high H1-B visa approvals based on 2013 data:

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Source: The H-1B visa race continues: Which regions received the most?, The Brookings Institution

Traditionally the largest number of H1B visas have gone to applicants from India, China and Canada in that order. Indians receive the highest percentage of available H1B visas due to their dominance in IT industry. Canada also ranks in the top since the country is a commodity-based economy and high-tech industries are practically insignificant compared to the U.S. So many Canadians looking to work in the IT or high-tech industries move to the South of the border to excel in their careers.

It should also be noted that beginning this May the spouses of H1B visa holders will also be allowed to work legally in the country. Hence the 85K cap limit will actually lead to more than 100K or more jobs going to H1B visa holders and their spouses.