Peruvian Equity Market Continues To Climb

Posted by on

The main Peruvian equity index IGBVL has climbed over 27%  in the last two months due to rising metal prices. Yesterday the index closed at 19,499. During the credit crisis the index reached just below 6000.

The Peruvian market has been on an upward trend since September. Last year the market went up 100.99% in local currency terms completely erasing the losses of 2008. According to a CEIC Macro Watch report, analysts expect the momentum in the mining sector to continue and also the strong macroeconomic foundations of the domestic economy to benefit equity prices.

Some of the Peruvian stocks that are listed in the US are Compania de Minas Buenaventura (BVN) and  Creditcorp  Ltd. (BAP) on the NYSE and Cementos Lima (CEMTY),  Ferreyros (FERXY) and  Grana y Montero (GRYMY) on the OTC market.

Compania de Minas Buenaventura (BVN)  is Peru’s largest publicly-traded precious-metal mining company engaged in the extraction of silver, gold, zinc, lead and copper. BVN’s 5-year average annual growth rate is about 22%.

Credicorp Ltd. (BAP) is a financial services holding company that operates in the banking and insurance sectors. The stock more than tripled form its March 2009 lows of about $35 and closed at $126.40 yesterday.

Cementos Lima(CEMTY) is cement, ready-mixed concrete, and brick maker.The company also mines lime and gypsum and imports coal and resells whole or pulverized coal. Year-to-date the stock is up over 64%.

Ferreyros(FERXY) is an importer of industrial engineering goods such as Caterpillar bulldozers, Massey-Ferguson tractors, etc. YTD the stock is up over 83%.

Grana y Montero  (GRYMY) is a construction and materials company with operations in building projects, toll roads, etc. YTD the ADR has shot up by about 137%.

Another easy way to gain exposure to the Peruvian market is via the iShares MSCI All Peru Capped Index Fund (EPU). The fund has an asset base of about $427M and holds 26 companies with the materials industry accounting for about 60% of total holdings.

Related:
Investing in Frontier Emerging Markets (Bloomberg Businessweek)

Corporate Income Taxes: E.U. vs. U.S.A

Posted by on

Contrary to popular belief, the average corporate income tax rate in the U.S is actually higher than many other developed economies. Some economists and media pundits have suggested that the Federal government should reduce this tax rate to stimulate investment and job growth.

The average corporate income tax rate in the U.S. is 35% compared to just 23% in the EU. The rate is even lower some countries of the EU as the graphic shows below:

Source: The Wall Street Journal

Ireland has the lowest rate at 12.5% in the EU except for Cyprus and Bulgaria. Ireland’s very low corporate tax rate attracted many multinationals to invest there leading to tremendous growth of the economy before the downturn.

The Top 25 Asian Banks (excl. China and Japan) By Tier 1 Capital

Posted by on

Earlier this year The Banker magazine published its annual ranking of the world’s top banks. The graphic below lists the top 25 Asian banks (excluding China and Japan) based on their Tier 1 capital:

Four Australian banks take the top four spots followed by Singapore’s DBS Bank (OTC: DBSDY). Two other Singapore banks are also in this list. Despite having a large economy, India is represented by just three banks.  Compared to India, the smaller countries of Taiwan, Malaysia and Singapore all have three banks in this ranking of Asia’s top 25 banks.

Household Stock Ownership in Select Countries

Posted by on

According to an article in the Bloomberg BusinessWeek,  44% of households in the U.S. owned shares of mutual funds in 2009. In Germany, only 9.4% of the population owned mutual fund shares in the first half of 2010.

Germans generally tend to be very conservative and avoid the stock markets. Only 6% of Germans directly owned stocks in the first half of this year. Compared to Germany, 15% of the French  and 10% of the British population own stocks.

Instead of equities, Germans have 28% of their assets invested in life insurance products. Like Germans, the French also prefer life insurance products. Next to cash and other liquid investments, the French stash away a large  portion of their retirement savings in life insurance products. Hence insurers such as AXA (OTC: AXAHY) have a strong leadership position in France. Last year AXA generated 25% of its insurance revenue in France. Allianz (OTC: AZSEY), one of the world’s largest insurance and asset management firms, is headquartered in Munich, Germany.

Some interesting facts from the Investment Company Institute:

“Total U.S. retirement assets were $16.0 trillion at year-end 2009, up nearly $2.0 trillion, or 14 percent, from year-end 2008.

At year-end 2009, retirement assets represented 35 percent of all U.S. households’ financial assets.

More than half of the $2.8 trillion in 401(k) assets at year-end 2009 was invested in mutual funds, primarily in stock funds.”