Chart: Russell Global Market Cap Index Performance 2010

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The chart below shows the performance of the various Russell Global Market Cap Indices from 1999 thru 2010:

Click to enlarge

 

 

Source: Russell Investments

Some observations:

  • In the period shown, emerging market small caps have been the best performers in most years.
  • For most years, developed market large caps have been the weakest performers.
  • Since 2001, emerging markets large caps have outperformed developed markets large caps.
  • At the height of the global financial crisis in 2008, emerging market stocks of all caps fell heavily than developed world stocks but rebounded sharply in 2009.

 

Electricity Demand Continues to Grow in China

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The demand for electricity continues to grow in China as surging economic growth creates a rising middle-class. With the largest population in the world, naturally the growing number of middle-class Chinese consume more energy. This is especially true with electricity since higher sales of consumer electronics, household appliances increases power demand. In addition to demand from consumers, China’s industrial sector also drives the demand for electricity higher.

Ever since China opened its economy to free-market reforms, the country has become:

  • The second largest energy consumer in the world.
  • The 3rd largest importer of oil.
  • The largest producer and consumer of coal.

The chart below shows the growth rate of per capita GDP and electricity consumption in constant 200 dollars:

Click to expand

Source: Electricity-Economy Interactions: Implications for Electricity Policy and Pricing Reform in China, Ismail O.Soile, Fountain University, Osogbo, Nigeria

Coal remains the major source of fuel for China’s electricity generation followed by hydro power. Nuclear and other sources of electricity account for rest of the total capacity as shown in the graph below:

Source: Energy Information Agency

The EIA site notes:

“The Chinese government has made the expansion of natural gas-fired and renewable power plants as well as electricity transmission a priority”.

From an investment perspective, China’s growing demand for electricity presents investment opportunities in Western companies that supply the technology, equipment and natural resources to China. Australian coal mining companies are the major suppliers of thermal coal to China. Last year Australia’s Resourcehouse signed a $60 billion deal to supply 30 million tons of coal a year for 20 year to China’s power stations. This deal was the biggest ever export contract signed by an Australian firm at that time. Other global firms such as Germany’s Siemens (SI), USA’s General Electric (GE) and France’s GDF Suez (GDFZY) and Areva have large presence in the Chinese electricity market.

Disclosure: No positions

Latin America’s Trade With China Grows

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China is becoming a major trade partner with many Latin American countries. China’s main interest in the region include natural resources such as oil, iron ore and agricultural commodities such as soyabeans. Latin American countries’  trade with China increased tenfold in the period 2000-2007. However the U.S. is still the largest trade partner with Latin America. China’s trade in Latin America accounted for just one-fifth of that of the U.S in 2008. Currently China´s major trading partners in the region are Brazil, Mexico, Chile, Argentina and Peru.

The chart below shows total trade of Mexico, Brazil and Chile with China:

Click to enlarge

Total trade from Brazil, Chile and Mexico to China has increased for many years now and continues to move up.

The chart below shows the total trade of Brazil, Chile and Mexico with U.S.:

Total trade of the three Latin American countries with the US has decreased in the period shown and the trend is downward sloping. It must be noted however, Mexico’s trade with the US is still very large representing 65% of all trade.

From an investment strategy perspective, one way to gain from China’s economic growth is to invest in some of the miners and agricultural producers in Latin America.

Source: Who Influences Latin American Stock Market Returns? China versus USA, International Research Journal of Finance and Economics

The Top 10 Italian Companies By Market Cap

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** For the latest t0p 10 companies go to:

The Top 10 Italian Companies By Market Cap 2016

******

The table below lists the Top 10 Italian companies based on Market Capitalization including the ADR ticker if available:

[TABLE=1029]

Source: Financial Times

Intesa Sanpaolo SpA (ISNPY), UniCredit SpA and Assicurazioni Generali SpA (ARZGY) can be avoided due to the ongoing debt crisis. Telecom Italia SpA(TI),Enel Spa(ENLAY), ENI Spa(E) have dividend yields of 6.98%, 6.91% and 6.28% respectively.

Disclosure: No Positions