How to Invest in Philippines?

Posted by David Hunkar on 27 April 2010, 4:54 pm

Among the frontier markets, investors have often overlooked the Philippines. With a population of about 91 million and a stable manufacturing and service-based economy, the country offers several good investment options. Goldman Sachs included Philippines in its “Next Eleven” list of countries. This year the economy is projected to grow 3.6%.

Some of the reasons to invest in Philippines include:

Banking sector appears resilient
The capital adequacy ratio of banks exceed the minimum required
Economy is less dependent on exports than many other regional peers with exports-to-GDP ratio around 30%
Inflation is mild and is under the target range set by the Central Bank
Financial markets has rebounded due to strong overseas remittances, macroeconomic policies and renewed confidence
The current account remains a surplus
Many companies in the telecommunications, energy, property,banking and retail trade sector are owned by conglomerates
Many of its major trading partners are in fast-growing Asia

Source: IMF

According to a recent article, the banking and utility sector has interesting opportunities for investors.Currently there is no country-specific ETF for Philippines. However in February, iShares filed papers to launch a Philippines ETF. This ETF will be heavily concentrated in utilities, telecommunications and financials.

The Philippine Long Distance Telephone Company accounts for about one-fourth of the benchmark PSE Composite Index. Its ADR trades under the ticker PHI in the New York Stock Exchange. It has a dividend yield of 6.17%. The company is well-positioned in the industry and is expected to experience accelerated growth with its broadband service. Some of the largest companies such as Ayala (OTC: AYALY), Globe Telecom (GTMEY), Metropolitan Bank and Trust Company(OTC: MTPOY), etc. trade on the OTC markets. The complete list can be found here.

Some Foreign Banks Are Picking Up Failed US Banks

Posted by David Hunkar on 26 April 2010, 6:05 pm

Seven more banks failed last Friday bringing the total number of bank failures in the U.S. to 57 so far this year. While most of the failed banks are acquired by other strong domestic banks, a few foregin banks are gettting into the game.

From a Wall Street Journal article titled “Foreign firms sccop up failed US banks” last week:

“Toronto-Dominion Bank of Canada bought three Florida banks that failed last Friday, while Japan’s Mitsubishi UFJ Financial Group Inc. acquired one in California. The four purchases increase the number of failed U.S. banks scooped up by non-U.S. banks to seven since the start of 2009. A total of 190 banks have been seized by regulators, including 50 so far this year, most of which have been bought.

International buyers are lured to broken financial institutions because, like U.S. banks, they think the worst is over for the battered U.S. banking industry. First-quarter earnings reports are adding to optimism that loan losses have peaked, even though lenders still are grappling with high loan-default rates and suffering real-estate portfolios.”

With the purchase of above three banks, TD Bank now has 103 branches in Florida. Unlike TD, the other four large Canadian banks do not seem to be interested in expanding their footprint further in the US market.

On a related note, here is an interesting chart on the growth of banking sector profits:

Click to Enlarge

Source: Bloomberg Businessweek

The Top 15 Global Cash-Rich Tech Companies

Posted by David Hunkar on 26 April 2010, 1:00 am

From the “Numbers” section of the latest issue of Bloomberg Businessweek:

Click to Enlarge

The foreign companies with huge cash and short-term cash equivalents include Telefonica (TEF), Nokia(NOK), Pansonic (PC), Sony (SNE), Samsung Electronics and China Mobile (CHL).

27 U.S. Stocks Yielding More Than 4% Dividends

Posted by David Hunkar on 25 April 2010, 4:52 pm

The table below lists 27 US stocks trading on the NYSE with market capitalization of over $10B and dividend yields greater than 4%:

[TABLE=481]

Stocks from the energy and utility sectors dominate this list. Cigarette makers, consumer staple stocks and drug makers are also represented.Pfizer, Merck and AT&T have market caps in excess of $100B.