Companies that are in the liquor business are believed to be recession-proof as consumers tend to drink liquor to get away from their worries. Hence investors can explore some of the foreign beer, wine and other liquor producers.
The following are six foreign beverage makers whose stocks trade on the OTC markets:
C&C; Group (CCGGY)
Ireland
Fosters(FBRWY)
Australia
Coca-Cola Amatil (CCLAY)
Australia
Calsberg (CABGY)
Denmark
SABMiller (SMGBY)
UK
Tsingtao Brewery (TSGTY)
China
The charts below show the performance comparison of two of the largest private sector banks in Brazil: Banco Bradesco(BBD) and Itau Unibanco (ITUB).
5-Year Performance Comparison
1-Year Performance Comparison
For the most part, BBD and ITUB track each other. However in the last one year, Itau Unibanco has performed slightly better than Bradesco. Both the banks hold considerable potential for growth in the future as the Brazilian middle-class expands. Bradesco and Unibanco stocks are attractive at current levels.
A recent article in the Bloomberg BusinessWeek magazine titled There’s a New Silk Road, and It Doesn’t Lead to the U.S. discussed the growing trade ties between emerging markets.
From the article:
“As the U.S. emerges from the recession, American investors often wonder where the growth is going to come from. Perhaps they should talk to Ruben Bisi, international operations director for Marcopolo, Brazil’s biggest bus maker. It’s having a banner year, with revenue up 47 percent so far. You won’t see Marcopolo buses in the U.S., though. They’re cruising the highways and city streets of Argentina, Colombia, Mexico, Egypt, India, China, and South Africa. Brazilians often have a better relationship with these customers than big multinationals do, says Bisi. “We are from an underdeveloped country as well,” he explains. Almost 40 percent of Marcopolo’s sales of $1.1 billion come from outside Brazil: It sold 460 buses to South Africa for the World Cup.
Marcopolo is a traveler on what Stephen King, chief economist of HSBC (HBC), has dubbed “the new Silk Road”—a 21st-century version of the trade routes that crisscrossed Asia almost 2,000 years ago, linking merchants in China to their counterparts in India, Arabia, and the Roman Empire. The new Silk Road spans the globe, connecting companies and consumers in Latin America, the Mideast, Asia, and Africa, and generating some $2.8 trillion in trade, according to the World Trade Organization.
King says emerging markets will grow about three times faster than rich nations this year and next. “There are now massive trade connections within the emerging markets,” he says. “It means in one sense the emerging world is protected from the worst ravages of the developed world.” The WTO estimates intra-emerging-market trade rose, on average, by 18 percent per year from 2000 to 2008, faster than commerce grew between emerging and advanced nations.”
On the rising influence of Chinese firms in developing markets, the piece noted:
“While the U.S. and other developed countries hope to find their place on the Silk Road, the central player is China. Chinese exports to the emerging world accounted for about 9.5 percent of its gross domestic product in 2008, compared with 2 percent in 1985, King figures. Last month the Saudi Railways Organization awarded a contract to China South Locomotive & Rolling Stock to supply 10 locomotives. The Mecca-Medina rail contract went to Beijing-based China Railway Group (CRWOF). Shenzhen-based Huawei Technologies, China’s top maker of phone equipment, is investing $500 million in its research center in Bangalore. China Mobile, the world’s biggest phone carrier, may soon invest in Africa.”
As the U.S. and developed world economies remain sluggish, trade volume between China and emerging markets is rising at a staggering pace. In July, trade volume which includes exports and imports with foreign countries rose 40.9% compared to the same period last year. However China’s trade with emerging markets were much higher as noted in the examples below:
From another article related to intra-emerging markets trade :
“The Geneva-based World Trade Organisation (WTO) estimates intra-emerging market trade rose on average by 18% a year from 2000 to 2008, faster than commerce between emerging and advanced nations. It totalled $2,8-trillion in 2008, about half of emerging-market trade with all nations.
That performance is especially welcome now given the sluggish recovery in the rich economies, said HSBC’s King, author of Losing Control: The Emerging Threats to Western Prosperity and a former UK Treasury official.
Chinese exports to the emerging world accounted for about 9.5% of gross domestic product in 2008, compared with 2% in 1985, he calculated. India’s jumped to 7.3% from 1,5% and Brazil’s almost doubled to 6.3%. Emerging-market economies will grow 6.9% this year and 6.2% in 2011, King said, outpacing the 2.4% and 1.9% projected expansions of developed economies.
“There are now massive trade connections within the emerging markets and they’re becoming increasingly important,†said King in a telephone interview. “It means in one sense the emerging world is protected from the worst ravages of the developed world.—
The Chinese are making all the right moves. As China’s trade relations with the fast growing emerging markets develops further, the export-oriented economy becomes more diversified and will perform better even when the economies of the developed world struggle to gain momentum. However it must be noted that the U.S. and Western Europe will continue to remain as the largest export destinations for some time. But overtime China will become less reliant on the wealthy countries for growth as rising income levels in emerging countries coupled with demand for cheap goods make Chinese products attractive.
Ireland: A recession of the banks, by the banks, and for the banks
Canada’s ‘more humane society’ saved economy: Krugman
Is it time to buy shares in Lloyds?
Denmark Starts to Trim Its Admired Safety Net
There’s money in tourism …
The automotive industry in developing countries: Ready to move up a gear?
The German economy grew sharply by 2.2% in the second quarter of this year according to data released on Friday. This figure is the highest recorded since the reunification of East and West Germany.
From an article in The Economist blog:
“The success of the euro-area’s largest economy owed a lot to a surge in exports (much of it to emerging markets) and to investment by firms at home looking to upgrade and expand their capital stock to meet that demand. Germany’s talent for bespoke engineering and sleek cars fits well with the needs of fast-industrialising countries and their new middle classes. China is a prized customer for the German firms that supply kit for power plants and other infrastructure projects. Small producers of niche capital goods have also seen a surge in orders. German cars have been selling well to affluent consumers in emerging markets. Sales of luxury Mercedes cars to China tripled in the year to July. Sales to India more than doubled. Other carmakers, such as VW and BMW, have prospered too.”
Germany’s Top Trading Partners in 2009
Germany’s Top Export Goods in 2009
Source: Federal Statistical Office
European countries are the top exports for German goods as shown in the chart above. However exports to China and other emerging countries are growing at a faster pace. Machinery, automobiles & parts and Chemicals are the top three export sectors accounting for about 40% of total exports in 2009.
In terms of investment opportunities, just five German companies currently trade on the organized US exchanges with many others on the OTC markets. The US exchange-listed German stocks are Aixtron (AIXG), Deutsche Bank(DB), Fresenius Medical Care(FMS), SAP (SAP) and Siemens(SI). Many large German firms do not trade on the US markets. For example, Germany’s largest steel maker Thyssenkrupp is not listed in the US markets. However the iShares MSCI Germany ETF (EWG) offer exposure to 51 stocks including Thyssenkrup.Financials account for 20% of the portfolio. The total net assets of the fund is $1.5B and the expense ratio is 0.55%.
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