Average Stock Holding Periods on Select Global Exchanges

Posted by David Hunkar on 3 November 2012, 3:55 pm

In September, 2010 I wrote an article discussing the decline average holding periods on the major stocks exchanges of the world. One of the charts included in that post is the following chart for the NYSE:

Click to enlarge

The average holding period for stocks has declined on most major exchange for many years now for due to short-term mentality of individuals and institutions alike, lower transaction costs, growth of hedge funds, high-frequency trading, growth of ETFs, etc.According to one report, investors held stocks on the New York Stock Exchange(NYSE) for an average of two years in 1991 but only for five months in 2008. However this situation has improved since the financial crisis of 2008 and in 2010 the average holding period was eight months as shown in the chart below:

Source: Means, Ends and Dividends, March 2012, BlackRock Investment Institute

Inequality of Income Between Select Countries

Posted by David Hunkar on 1 November 2012, 6:29 pm

The Gini Coefficient measures inequality of income or wealth between countries. The higher the ratio the higher the inequality.Countries such as Brazil, Russia, China, India, USA, etc. have high Gini coefficients due to the extreme disparity in wealth and income between the elite and the rest of the population.

The following chart shows the Gini coefficients for select group of countries based on disposable income:

Click to enlarge

Source: How tax can reduce inequality, OECD Observer

In Asia, China is more unequal than India. Among the OECD countries, Turkey is more unequal than Sweden which is not surprising.

From the OECD article:

A rising tide may not now lift all boats, to misquote US President Kennedy’s original analogy made in 1963 linking economic growth to prosperity for all. Can governments maintain the social cohesion needed for sustainable, long-term growth? Supporting an equitable income distribution remains one of the key goals of fiscal (and tax) policy.

The rapid growth of emerging economies in the past decade or so has lifted hundreds of millions of people out of absolute poverty and reduced income disparities across the world as a whole. At the same time, until the financial and economic crisis of 2008, most other economies were expanding too. However, within the OECD and emerging economies not all regions or people benefitted equally from the growth years. On the contrary, the distribution of income tended to become more unequal.

The Top 25 Global Pharmaceutical Companies by 2011 Sales

Posted by David Hunkar on 31 October 2012, 6:03 am

The Pharmaceutical Executive magazine published earlier this year its annual ranking of the Top 50 Pharmaceutical Companies by revenue. The following table lists the top 25 global companies ranked based on sales in 2011:

S.No.	Company	Ticker	2011 Rx Sales (in $ Billions)	Country
1	Pfizer	PFE	$57.70	USA
2	Novartis	NVS	$54.00	Switzerland
3	Merck	MRK	$41.30	USA
4	Sanofi	SNY	$37.00	France
5	Roche	RHHBY	$34.90	Switzerland
6	GlaxoSmithKline	GSK	$34.40	UK
7	AstraZeneca	AZN	$33.60	UK
8	Johnson & Johnson	JNJ	$24.40	USA
9	Abbott	ABT	$22.40	USA
10	Eli Lilly	LLY	$21.90	USA
11	Bristol-Myers Squibb	BMY	$21.20	USA
12	Teva	TEVA	$16.70	Israel
13	Amgen	AMGN	$15.30	USA
14	Takeda	TKPYY	$15.20	Japan
15	Boehringer Ingelheim	N/A	$13.80	Germany
16	Bayer	BAYRY	$12.80	Germany
17	Daiichi Sankyo	DSNKY	$11.60	Japan
18	Novo Nordisk	NVO	$11.50	Denmark
19	Astellas	ALPMY	$11.40	Japan
20	Gilead Sciences	GILD	$8.10	USA
21	Otsuka	OTSKY	$7.40	Japan
22	Merck KGaA	MKGAY	$7.20	Germany
23	Baxter International	BAX	$6.10	USA
24	Mylan	MYL	$5.50	USA
25	Servier	N/A	$5.00	France

Source: Pharmaceutical Executive

The top 50 companies accounted sold $610 billion in human prescription pharmaceuticals last year and just the top 10 accounted for 59% of the total sales of the 50 companies. Four companies that dropped off the ranking due to mergers are Genzyme, Alcon, Cephalon and Nycomed. Israel-based world’s largest generic drug maker Teva(TEVA) was ranked at number 12. Amgen(AMGN) and Gilead Sciences(GILD), two of the hot biotech companies from the 90s, appear in the above list as well.

The complete list of the top 50 companies and other rankings can be found in the pdf document located here.

The Top 50 Global Pharma Companies 2013

Disclosure: No Positions

Who is Responsible for Most of the Daily UK Stock Market Volume?

Posted by David Hunkar on 31 October 2012, 5:07 am

Most of the stocks in the UK equity market is held by pension funds, insurance companies, foreigners, etc. The share of stocks held by individuals is very low. But on an average about 700,000 shares are traded on a daily basis on the London Stock Exchange (LSE). The majority of the daily trades on the LSE are not by individual investors but by traders. In fact, a a recent study showed that 72% of daily market turnover is done by Hedge Funds, High Frequency Traders and Proprietary Traders. Though these market participants hold a small portion of the total shares listed they are biggest traders.

Click to enlarge

Source: THE KAY REVIEW OF UK EQUITY MARKETS AND LONG-TERM DECISION MAKING, Final Report, June 2012, The Department for Business, Innovation and Skills, UK

The Organizational Structure of the Chinese Communist Party

Posted by David Hunkar on 30 October 2012, 10:05 pm

The New York Times published an expose last week on the wealth accumulated by the family of outgoing Chinese Prime minister Wen Jiabao. According to the article, Mr.Wen’s family and relatives control assets worth at least $2.7 billion. Though Mr.Wen comes from an extremely poor family many of his relatives have become very rich. Many other politically connected individuals and party officials have also become wealthy since China moved from a socialist economy to a free-market economy. From a Bloomberg article earlier this year:

The net worth of the 70 richest delegates in China’s National People’s Congress, which opens its annual session on March 5, rose to 565.8 billion yuan ($89.8 billion) in 2011, a gain of $11.5 billion from 2010, according to figures from the Hurun Report, which tracks the country’s wealthy.That compares to the $7.5 billion net worth of all 660 top officials in the three branches of the U.S. government.

China is a one-party country ruled by the Chinese Communist Party(CCP). Though the country follows the capitalist economic model, the political power remains under the firm grip of the CCP. Any attempts by citizens to challenge the CCP is crushed and to-date no other party has survived despite endless talks of a democratic China since the Tiananmen Square protests of 1989.

Nobody knows how the members of the CCP are elected. The process remains opaque to say the least. The structure of the CCP is shown in the chart below:

Click to enlarge

Source: The Political Mapping of China’s Tobacco Industry and Anti-Smoking Campaign, The John L. Thornton China Center at Brookings, October 2012

From the Brookings research report:

Chart 3-1 presents the organizational structure of the CCP at the national level, using data on the 17th (current) National Congress of the CCP as an example. The National Congress of the CCP, which convenes for about two weeks once every five years, is the most important political convention in the country. The party congress delegates (currently numbering 2,270) elect the Central Committee (currently 371 members) and the Central Commission for Discipline Inspection (127 members).171 In theory, the Central Committee then elects the general secretary of the CCP, the Politburo Standing Committee (9 members), the Politburo (25 members), the Secretariat (6 members), and the Central Military Commission (11 members). In practice, however, the process is top down rather than bottom up: members of these leading Party organs guide the selection of members of the lower-level leadership bodies such as the Central Committee, which then “approves” the slate of candidates for higher-level positions such as the next Politburo and its Standing Committee. To call the Central Committee’s selection of the Politburo an election is something of a misnomer. Members of the Politburo are actually elected by the outgoing Politburo Standing Committee and a handful of retired top leaders. This largely opaque process involves complicated factional deal-making and compromises.