The Top 10 Global Hotel Groups 2012

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The Top 10 Hotel Groups in the World for 2012 is shown below:

Click to enlarge

Source: Hotel Online

Of the top 10, four groups have more than 600,00o rooms each. UK-based Intercontinental Hotels Group plc (IHG) tops the ranking with about 660,000 rooms. Seven of the ten hotel groups are US-based.

In this year’s ranking, the Chinese group Home Inns doubled its capacity due to the takeover of its national competitor Motel 168 and pushed out Hyatt Hotels (H) from the Top 10.

From a recent Cornell University study on the US hotel industry stocks:

Hotel industry stocks are far more sensitive than the rest of the equity market to changes in interest rates, according to a new study from the Cornell Center for Hospitality Research (CHR). When the U.S. Federal Reserve unexpectedly changes the federal funds rate, the entire stock market reacts, but changes in hotel stock prices are much more dramatic than the market as a whole. The study, “Saving the Bed from the Fed,” by Levon Goukasian and Qingzhong Ma, is available at no charge from the CHR. Goukasian is the John and Francis Duggan Professor of Business at Pepperdine University, and Ma is an assistant professor of finance in the Cornell School of Hotel Administration.

“Hotel stocks are sometimes viewed as risky,” observed Ma. “Our study shows that it’s true that hotel stocks react strongly to unexpected changes in the fed funds rate. However, investors may find hotels to be a valuable part of their portfolio, particularly if they apply appropriate risk management strategies.” Goukasian and Ma also found that restaurant stocks do not react as strongly to unexpected changes in the fed funds rate.

The Top 10 Global Hotel Groups are listed below with their tickers and current dividend yields:

1.Company: IHG InterContinental Hotels Group (IHG)
Current Dividend Yield: 2.17%
Country: UK

2.Company: Hilton Hotel Corp.
Current Dividend Yield: N/A
Country: USA

3.Company: Marriot International (MAR)
Current Dividend Yield: 1.38%
Country: USA

4.Company: Wyndham Hotel Group (WYN)
Current Dividend Yield: 1.75%
Country: USA

5.Company: Accor SA (ACRFY)
Current Dividend Yield: 2.44%
Country:France

6.Company: Choice Hotel International, Inc. (CHH)
Current Dividend Yield: 1.80%
Country: USA

7.Company: Starwood Hotel & Resorts Worlwide (HOT)
Current Dividend Yield: 0.90%
Country: USA

8.Company: Best Western International
Current Dividend Yield: N/A
Country: USA

9.Company: Home Inns & Hotels Management Inc (HMIN)
Current Dividend Yield: N/A
Country: China

10.Company: Carlson Rezidor Hotel Group
Current Dividend Yield:
Country: USA

Disclosure: No Positions

Knowledge is Power: Hiring, Retirement, Blackout Edition

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French ADR Stocks to be Hit with Financial Transaction Tax (FTT)

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The French President Francois Hollande has introduced a tax on financial transactions effective  August 2, 2012. This tax of 0.2% applies on all stock purchases of publicly traded French companies with market capitalization of over over one billion Euros.

France has become the first country to introduce this tax. While one goal of this tax is to raise revenues the other goal is to curb speculation in the markets. In the recent global financial crisis, stocks of European companies especially banks fell heavily and European governments have been trying novel and ineffective ways to prevent further crashes. At the height of the crisis some countries instituted short sales ban on some companies. Along the same line, the Financial Transaction Tax (FTT) has been instituted. Many European countries do not support the view of the new Mr.Hollande.

From a news article:

Sweden also opposes the idea, after a disastrous experience with a similar tax on financial transactions was introduced and then abandoned in the 1980s by the government in Stockholm.

The country set a 0.5% levy on all purchases and sales of equity securities in 1984, and then doubled the amount two years later after disappointing revenues.

The policy was abandoned after analysts revealed it had led to an exodus of traders.

Anders Borg, the Swedish finance minister, estimates that “between 90-99%” abandoned Stockholm and took their business to London.

The new tax will be applicable to American Depositary Receipts (ADRs) of French companies as well. From a news release by BNY Mellon Depository Services:

Holders of American Depositary Receipts (ADRs) representing shares of the below listed BNY Mellon French ADR Programs are hereby notified that it has been announced that the French finance bill is being amended and that ADRs will be in scope for application of the Financial Transaction Tax (FTT) to ADRs, effective December 1, 2012 rather than August 1, 2012.

Accordingly, and notwithstanding previous Notices to the contrary, the ADR books will NOT be closed effective end of business July 31, 2012 for issuances, transfers and cancellations on the programs listed below.

It is not clear whether FTT may still be due and payable beginning on August 1, 2012 to transfers of shares for issuance or cancellation of ADRs. Investors and market participants should consult their brokers, and their legal and tax advisors for additional information.

Source: BNY Mellon

Related:

The List of ADRs Subject to the French Financial Transaction Tax

The full list of French ADRs can be found here.

It must be noted that France already taxes a hefty 25.0% Withholding Tax for Dividends paid to US investors. So this new tax is sure to make French stocks less attractive to invest.

Financial Transaction Taxes: International Experiences (Bank of Canada Report in pdf format)

Top 50 Latin American Brands 2012

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The Top 50 Latin American Brands for 2012 are listed in the table below:

Click to enlarge

Source: Latin American Brands, Financial Times Special Report

Brazil’s energy giant Petrobras (PBR) tops this list. Some of the top Latin American financial institutions that made it to this ranking include Bradesco (BBD), Itau (ITUB), Banco do Brasil (BDORY) and Banco De Chile (BCH).

Disclosure: Long BCH, BBD, ITUB and PBR

Public Sector Banks’ Market Share in Banking Remains High in Emerging Countries

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State-owned banks play a dominant role in the banking industry in many emerging markets such as Brazil, China, India, etc.Unlike private sector and foreign banks, state-owned banks are highly influenced by local politicians and the government.Hence it is not unusual for these banks to lend liberally to projects such as infrastructure development, housing, etc. that are supported by the  government.In addition, in the name of offering banking services state-owned banks also operate in rural and undeveloped areas which are not serviced by private and foreign banks.

In the developed world, the banking industry is run by the private sector.State-owned banks are virtually unheard of in most developed countries. In the US, the only bank owned by the government is the Bank of North Dakota in the state of North Dakota. Despite being run as profit-making private enterprises, developed world banks are no better than state-owned emerging market banks in many aspects.U.S. banks together with Wall Street caused the global financial crisis and the ensuing crisis forced the shutdown of more than 400 banks.The too-big-to-fail banks have to be bailed out in order to prevent their collapse and further risks to the economy.These banks undertook reckless lending, and followed other risky strategies despite being regulated by multiple government agencies and following some of the “best practices” in the industry.Canadian banks are the exception in the developed world due to the strict regulations enforced by the Office of the Superintendent of Financial Institutions (OSFI).

In the rest of the western world, regulators not only failed to do their jobs but in many cases actually enabled the financial crises.In addition to the global financial crisis, developed banks continue to surprise investors, depositors  and regulators alike with new losses or irregularities. The most recent one is the Libor rate manipulation scandal – courtesy of the British Banking industry. Compared to the developed world banks, banks in the emerging markets remained healthy throughout the global financial crisis and continue to remain strong with high capital adequacy ratios and low NPA levels. Brazilian banks, for example, maintain high capital adequacy ratios (CAR) among major Emerging markets.

The following charts shows that Brazilian state-owned banks have been increasing credit growth than private and foreign banks and the division of ownership of banking assets among public, private and foreign banks in select emerging markets:

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In China, Russia and India, state-owned banks account for over 50% ownership of banking assets while Mexico does not have banks operated by the government.

Source: Brazilian banking sector – a view from 30,000 feet, Deutsche Bank Research

Five state-owned emerging market banks are listed below for further research:

1.Bank: Banco Do Brasil (BDORY)
Current Dividend Yield: 2.40%
Country: Brazil

2.Bank:Bank of China (BACHY)
Current Dividend Yield: 12.35%
Country:China

3.Bank:China Construction Bank Corporation (CICHY)
Current Dividend Yield:  5.59%
Country: China

4.Bank:Industrial And Commercial Bank Of China Ltd (IDCBY)
Current Dividend Yield: 5.54%
Country:

5.Bank: Sberbank Rossii OAO (SBRCY)
Current Dividend Yield: 2.28%
Country: Russia

Note: Dividends noted are as of August 2, 2012

Disclosure: No Positions