A Review of Foreign Oil and Gas Producer Stock Returns

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US stocks are squarely in the bear market with the S&P 500 down over 20% so far this year. There is no place to hide and take shelter as most sectors are down. One of the few sectors that has performed well is the energy sector. Energy stocks are up by 29.2% YTD. Crude has soared by over 40% and natural gas is also a winner with a rise of 45.4% year-to-date.

The demand for oil and other energy commodities has shot up and continues to remain strong with the end of the Covid-19 pandemic. Despite high prices consumers are traveling for example. The Russia-Ukraine war has also made the situation worse. Oil prices are unlikely to go down significantly until the war ends. Releasing small amount of oil from the Strategic Petroleum Reserve (SPR) and cutting federal taxes are all for PR purposes and is not going to help take the price of gasoline to pre-pandemic levels.

With that said, most of the oil stocks have performed very well in this brutal market. For example, US energy giant Exxon Mobil (XOM) has increased by 38%. After reaching as high as $104 the stock is currently trading at over $87. Similarly Chevron(CVX) and ConocoPhillips(COP) have risen by 23% and 24% respectively.

Though US energy stocks are up by double digit percentage points, not all exchange-listed foreign oil producers have done well. For instance, Norway’s Equinor (EQNR) has gone up 28% YTD.

The Year-to-Date returns of Foreign Oil & Gas Producers trading on the US exchanges are shown below:

S.No.Company NameTickerStock Price (Ending July 1,2022)Yeat-to-Date Change (%)Country
1Vista Energy S.A.B. de C.V.VIST$7.4840.34%Argentina
2SasolSSL$21.6832.20%South Africa
3EquinorEQNR$33.8328.48%Norway
4Transportadora de Gas del SurTGS$5.2217.57%Argentina
5PetroChinaPTR$47.357.10%China
6Petroleo Brasileiro-PetrobrasPBR$11.767.10%Brazil
7TOTALTOT$52.836.81%France
8BPBP$28.286.20%United Kingdom
9China Petroleum & ChemicalSNP$45.14-2.95%China
10YPFYPF$3.32-13.09%Argentina
11EcopetrolEC$11.08-14.04%Colombia
12EniE$23.72-14.21%Italy

Source: BNY Mellon

Industry leaders such as Total and BP have had average returns so far this year. Political risk had led investors to flee Colombia’s EcoPetrol(EC) since the country elected its first leftist President Gustavo Petro.

From an investment perspective, the time to buy oil stocks was last year. However investors looking to add foreign oil stocks can keep an eye on the above list and look for attractive entry points.

Disclosure: Long EC

Quick Post: A Look at SPDR S&P Biotech ETF

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Biotech stocks have not performed well for many months now. The sector soared in 2020 and peaked in early 2021. Despite high hopes for the industry due to vaccine development and impacts of Covid-19, stocks in the industry plunged or languished with no end in sight.

The current bear market adds more pain to biotech stocks. One of the big two biotech ETFs is the SPDR S&P Biotech ETF (XBI). This ETF can be considered as the proxy for the industry. It has declined by about 34% year-to-date. This is much worse then the overall market as represented by the S&P 500.

SPDR S&P Biotech ETF – Year-to-Date Return:

Click to enlarge

Source: Google Finance

The five year chart shows the bull market that started in 2020 and reached a peak in early 2021:

Source: Google Finance

A recent article in the journal noted that big pharma firms would not bailout the battered sector. From the piece:

The stock market might be in the doldrums, but the biotechnology index has fallen off a cliff. One measure says it all: Dozens of publicly traded biotechs have dropped so much that they are now valued below the amount of cash they have in the bank.

Some healthcare investors have been pointing to that trend as a sign things have started to bottom. The argument goes that biotech has become so cheap that big pharma—staring down a patent cliff and armed with hundreds of billions of dollars of dry powder for acquisitions—will come to the rescue. Indeed, a popular biotech exchange-traded fund, the SPDR S&P Biotech ETF, has rebounded by around 20% from its recent lows.

That analysis paints with too broad a brush. Many of the companies now trading below cash are likely to go out of business in a macroeconomic environment in which their key input cost—money—is rising. To an even greater degree than high-growth tech companies such as Shopify or Roblox, biotech struggles in a rising interest-rate environment because many companies don’t have any real revenue streams and don’t expect to have a product in the market for years. Sadly for both investors and patients, clinical trials move slowly.

That problem has been exacerbated by a biotech bubble in recent years as too many early-stage companies went public. In 2021, the peak bubble year, 111 biotechs had initial public offerings in the U.S., topping the previous peak of 91 in 2020. Some of those companies are still conducting preclinical trials, meaning they haven’t even begun testing their therapies on humans.

Source: Big Pharma Won’t Bail Out Battered Biotech, WSJ

From an investment perspective, it is important to remember that biotech stocks are not for the faint hearted. A single clinical trial failure can crush a stock almost overnight. Though a few will be winners and can earn astonishing returns, finding that stock from hundreds is impossible to say the least. Instead of individual stocks simply going with an ETF won’t work either as the above charts show.

Disclosure: No positions

 

The Historical Average Annual Returns of Australian Stock Market From 1900 To 2021

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The Australian equity market has returned an average of 13.2% per year from 1900 to 2021 according to the updated chart from MarketIndex. This return denotes total return – that is with dividends reinvested. Another fact to be pointed out is in the past 122 years, positive return years outperformed the number of years when returns were negative. This shows the importance of long-term investing and time in the market.

During the Global Financial Crisis (GFC) in 2008 the market declined by over 40%. However since then there were only 2 years with negative returns.

The following graphic shows the historical annual returns of Australian stocks from 1990 thru 2021:

Click to enlarge

Source: MarketIndex

Notes:

  • The returns shown above are total returns (i.e. share price returns + dividends)
  • The returns shown are in the local currency
  • The returns are for the All Ordinaries Index

Related ETF:

  • iShares MSCI Australia ETF (EWA)

Download:

See Also:

Disclosure: No Positions

Westpac ADR Update – Termination and Mandatory Exchange for Cash

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Westpac Banking Corporation’s ADR facility has been terminated by the depository BNY Mellon. ADR holders should automatically receive the cash proceeds($14.48 per ADR) in their accounts according to a notice posted by BNY Mellon. Full details are shown below:

Click to enlarge

 

Source: BNY Mellon 

Earlier:

Disclosure: Long WEBNF

Dividend Tax Rates in Europe: Chart

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Taxes on dividends paid out to shareholders of a corporation is an important source of revenue for countries. Similar to taxes on personal income, capital gains, etc. the tax rate on dividend varies between countries. The following chart shows “the top personal dividend tax rate, taking account of all imputations, credits, or offsets” for European OECD countries in 2021:

Click to enlarge

Source: Dividend Tax Rates in Europe, Tax Foundation

Latvia and Estonia do not have a tax on dividends. Instead they levy a 20 percent corporate tax on profits that are distributed to shareholders.

Ireland has the highest dividend tax rate at 51 percent followed by Denmark and the UK at 42 and 38.1 percent respectively.