The 10 Largest and Most Liquid Chinese Companies

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In order to identify the largest publicly-listed Chinese companies I used the S&P/CITIC China 30 index.

This index “covers the largest, most liquid Mainland Chinese companies with listings outside of Mainland China, providing foreign investors exposure to China’s growing economy.  The index is representative of listed blue chip Chinese enterprises, and is drawn from the entire universe listed H Shares, Red Chips, P Chips, N Shares and ADRs listed on the Hong Kong, Singapore, New York and NASDAQ stock exchanges, and can be traded without restrictions by all investors.”

The components of S&P/CITIC China 30 index have an avergage market cap of about $11.5B. The top 10 stocks account for about 75% of the market cap share.

The Top 10 components of the  S&P/CITIC China 30 index based on market cap are:

1. China Mobile (CHL)
Current Dividend Yield: 3.97%

2. Industrial & Commercial Bank of China (OTC: IDCBY)
Current Dividend Yield: 3.34%

3. China Life Insurance (LFC)
Current Dividend Yield: 0.80%

4. Bank of China (OTC: BACHY)
Current Dividend Yield: 4.19%

5. China Construction Bank (OTC: CICHY)
Current Dividend Yield: 1.55%

6. CNOOC Ltd (CEO)
Current Dividend Yield: 3.26%

7. Petrochina Co (PTR)
Current Dividend Yield: N/A

8. Tencent Holdings (OTC: TCEHY)
Current Dividend Yield: 0.28%

9. China Petroleum & Chemical (SNP)
Current Dividend Yield: N/A

10. China Shenhua Energy (OTC: CSUAY)
Current Dividend Yield: 1.78%

Falling Euro Set To Benefit German Exporters

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The US dollar has strengthened against the Euro in the past few months. The Euro trades at 1.19 to the dollar today. In 2008, the exchange rate reached nearly 1.60. One theory suggested by some fund managers to support the case for investing in Europe is that the falling Euro should help euro-zone exporters as their products become cheaper. As Germany is the largest economy in Europe and also has the largest export oriented-economy, German exporters would benefit from a cheaper Euro.

From a press release today:

“According to provisional data of the Federal Statistical Office (Destatis), Germany exported commodities to the value of Euro 75.3 billion and imported commodities to the value of Euro 61.9 billion in April 2010. Hence, German exports increased by 19.2% and imports by 15.7% in April 2010 against April 2009.”

Factory orders rose 2.8% in the month of April suggesting exports is picking up as domestic demand is weakening.

germany-exports-imports.gif

Last year Germany exported goods worth 803.2 billion euro and imported goods worth 667.1 billion euro creating a foreign trade  surplus of 136.1 billion euro. 63% of all goods were exported to EU countries in 2009 and the rest to other parts of the world. Asia accounted for about 14% of German exports.

In order to identify the largest German companies based on revenues I used Fortune magazine’s Global 500 list for 2009. Some of these German companies are listed below with their ADR ticker and current dividend yield:

Volkswagen(OTC: VLKAY)
Current Dividend Yield: 2.62%

Daimler (OTC: DDAIF)
Current Dividend Yield: 1.27%

E.ON (OTC: EONGY)
Current Dividend Yield: 6.54%

BASF (OTC:BASFY)
Current Dividend Yield: 4.38%

RWE AG (OTC: RWEOY)
Current Dividend Yield: 6.71%

Bayer (OTC: BAYRY)
Current Dividend Yield: 3.34%

Continental (OTC: CTTAY)
Current Dividend Yield: N/A

Siemens (SI)
Current Dividend Yield: 2.59%

Henkel (OTC: HENKY)
Current Dividend Yield: 1.75%

Deutsche Telekom AG (DT)
Current Dividend Yield: 9.41%

ThyssenKrupp AG (OTC: TYEKF)
Current Dividend Yield: 1.67%

BASF (OTC: BASFY) is the largest chemical company in the world. Siemens(SI) has a strong presence in many emerging markets. Henkel (OTC: HENKY) is a consumer products giant whose brand portfolio includes some of America’s best-known brands such as Dial soaps, Purex laundry detergents,  Right Guard antiperspirants and Loctite adhesive.

Since most of the firms noted above trade on the OTC markets, another easy way to gain exposure to German equities is via the iShares MSCI Germany Index ETF (EWG) or the closed-end fund The New Germany Fund (GF).

IHS CERA: The Role of Canadian Oil Sands in U.S. Oil Supply

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The BP Deepwater Horizon oil spill has triggered outrage among the general public and may lead to heightened regulatory environment for the offshore drilling industry. Already the Obama administration has suspended shallow-water drilling in the Gulf of Mexico until producers resubmit plans to meet the revised safety and environmental rules. In the months and years to come additional restrictions may be put in place to prevent future disasters and potentially increasing the cost of oil exploration. In this scenario,  Canada’s oil sands to the US oil supply attains greater importance.

Renowned consultancy IHS  CERA recently published a report titled “The Role of Canadian Oil Sands in U.S. Oil Supply”. Some of the key takeaways from this report are noted below:

“Geography has made us neighbors. History has made us friends. Economy has made us partners. Necessity has made us allies.”
—John F. Kennedy, Address Before the Canadian Parliament in Ottawa, May 17, 1961.

  • The growth potential of Canadian oil sands as a source of US oil imports is three to four times higher in 2030 than in 2009
  • Due to the high cost of alternative fuels, the US will continue remain as the largest oil market in the world for the next two decades
  • Oil sands production more than doubled form 2000 to 2009
  • In 2009, the US consumed 22 % of  the world oil supply
  • US oil demand is unlikely to cross the peak reached in 2005

Last year, 60% of  the US petroleum demand was satisfied by imports from over 40 countries. However over the past decade 70 percent of crude oil imports have been sourced from just five countries as the table shows below

US-oil-imports-by-top-countries

It is interesting to see Canada among the top five suppliers to the U.S. Canada’s share of US oil imports jumped from 15% in 2000 to 21% in 2009 underscoring the strategic importance of Canadian oil sands.

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Canadian-Oil-sands-Production-Growth

Compared to other oil producing countries, Canada has the following advantages:

  • Of the top 15 countries with the potential to increase oil production in the next decade Canada has the most open oil and gas investment climate
  • Canadian oil sands capacity is not controlled by the government
  • Canada is the closest in proximity and policy to the US
  • Regulation of oil development in Canada is among the most robust in the world
  • Canadian oil sands offer greater oil supply security to the US and is poised to become the number one source of crude oil imports this year
  • Canadian oil sands represent the second largest recoverable oil reserve in the world at 170 billion barrels with the capacity to produce more as technology improves
  • Canada and US have a highly integrated and efficient network to move electricity, natural gas and oil making it cheaper for companies to transport oil from production facilities to refineries
  • Investments in Canadian oil sands development have led to increased economic activity in both the US and Canada creating thousands of jobs and other benefits

In addition Canadian companies, American and other multinational companies have invested heavily in the Canadian oil sands industry. US  investors have provided capital for development various of oil sands projects reaping handsome profits in the process. Some of the major Canadian firms that are involved in the development of Alberta oil sands are Suncor Energy (SU), Nexen Inc(NXY), Canadian Natural Resources (CNQ), Imperial Oil (IMO), Teck Resources (TECK), Husky Energy (OTC: HUSKF), Encana (ECA) and Talisman Energy (TLM).