The 10 Most Profitable Brazilian Companies

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The ten most profitable publicly-listed companies in Brazil that made it to the Forbes Global 2000 list for this year are listed below. Redecard, the credit card network services firm and a component of the Bovespa Index,  is currently not traded on the US markets. Redecard plans to list on the US markets next year.

The 10 Most Profitable Brazilian Companies:

[TABLE=498]

Banco do Brasil(OTC: BDORY) is state controlled and trades on the OTC market.The two largest private banks in the country are Itau Unibanco(ITUB) and Banco Bradesco(BBD). Emerging market oil firms Petrobras (PBR) are becoming major players in the global arena traditionally dominated by developed market firms. For example, Petrobras continues to grow in exploration and production and earned a profit of $16B compared to the most profitable US company, ExxonMobil(XOM) which made $19B.

The Five Best and Worst Performing Chinese ADRs YTD

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The Shanghai SE Composite Index is down 17.71% Year-To-Date(YTD) and is flirting with bear the market territory. While many of the Chinese investors are afraid of the market now some see this plunge as a good time to enter the market. The optimists reason that it is not worth keeping money in banks due to the low interest rates and investments in real estate is not wise either since prices have skyrocketed. So they figure that the only alternative to is the equity market and are also convinced that stock prices have now become cheap.

One of the reasons for the crash of the Chinese equity market is the fear that The Peoples Bank of China will raise interest rates soon to cool down rising consumer and property prices.Speculation is still rampant in the equity and property markets and authorities may be forced to take strong actions to arrest this trend.

The Shanghai SE Composite Index 5-year Chart

SSE-Chart

Reflecting the performance in the domestic market, many Chinese ADRs have also fallen heavily this year. Out of the 80 Chinese ADRs that trade on the organized exchanges, just 24 are in the positive column YTD.

The Five Best Performing Chinese ADRs YTD:

1. Baidu(BIDU)
Current Price: $74.80
YTD Change:79.91%

2. Spreadtrum Communications(SPRD)
Current Price: $8.40
YTD Change:51.65%

3. China Southern Airlines(ZNH)
Current Price: $22.83
YTD Change:46.69%

4. ReneSola(SOL)
Current Price: $6.65
YTD Change:36.13%

5. CNInsure(CISG)
Current Price: $27.47
YTD Change:34.61%

The Five Worst Performing Chinese ADRs YTD:

1. Agria Corporation(GRO)
Current Price: $1.79
YTD Change:: -42.81%

2. Duoyuan Global Water(DGW)
Current Price: $20.24
YTD Change:: -43.43%

3. KongZhong(KONG)
Current Price: $6.74
YTD Change::-45.60%

4. Xinhua Sports & Entertainment(XSEL)
Current Price: $0.40
YTD Change::-52.94%

5. VisionChina Media(VISN)
Current Price: $3.43
YTD Change:: -68.59%

Note: Data shown is as of market close May 14, 2010

It must be noted that IFM Investments(CTC) and China Hydroelectric(CHC) may be the two worst performing Chinese stocks YTD but data is not unavailable.

The 57 Most Profitable German Companies

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The most profitable publicly-listed companies in Germany that appear in the Forbes Global
2000 list for this year are listed below:

[TABLE=497]

Source: Forbes

Electric and natural gas utility E.ON (OTC: EONGY) topped the list with profits of $12.05 B. Currently E.ON ADR has a 5.80% dividend yield. The second and third most profitable companies are the banking giant Deutsche Bank(DB) and the insurance company Allianz. The world’s leading chemical makers BASF and Bayer took the 9th and 10th spots respectively with profits of about $2B each. RWE AG(OTC: RWEOY), the other electric utility in this ranking pays a 6.01% dividend.

The iShares MSCI Germany Index ETF (EWG) offers exposure to most of the firms noted above. The fund has 51 holdings and total assets of $997M. Some of the reasons to invest in Germany can be found here.

Will David Cameron Bring A New Dawn for UK?

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Conservative leader David Cameron became the Prime Minister of UK after 13 years of Labor Party rule. He inherits a high budget and other economic ills as the graph shows below:

Uk-economy

Source: Bloomberg BusinessWeek

The British Pound fell steadily against the US dollar during former PM Gordon Brown’s time:

mm120510_1.gif

Source: Money Week

One of the main reasons for the lackluster performance of the British economy during the labor rule is the rise in lavish public spending with borrowed funds. For example, the public sector employment is very high in UK. There are about 6.098 million public workers in the country. 7000 more public workers were added to the state’s payroll in fourth quarter of 2009 when private sector jobs decreased by 61,000. Many of the public workers are unproductive and union members with great pay and benefits.

The national business model in the current state is unsustainable according to a scathing report titled Undisclosed and unsustaible: problems of the UK national business model from the Centre for Research on Socio-Cultural Change (CRESC) of The Open University. Many of the cities cannot afford to have so many public sector employees.

From the research report:

“The UK business model of expanding state and para-state employment was never sustainable in the longer term because government expenditure and subsidy are limited. And these emerging problems have been crystallised and focused by the financial crisis which removes the pre-2007 stimulus of public reflation and private asset bubble. Going forward, the UK cannot sustain a reasonable diffusion of prosperity into disadvantaged regions and social groups; while the upcoming public expenditure cuts will aggravate the UK’s national problems.”

From 2000 thru 2007, under Labor party the the real expenditure increased sharply from £411 billion to £606 billion. Most of these money were discretionary spending on health and education.

Uk-public-expenditure

In recent years Britain has become a nanny state where some people get paid liberally and remain unemployed since it is better to live off the state than work. From the Why work when I can get £42,000 in benefits a year AND drive a Merc? article:

“The Davey family’s £815-a week state handouts pay for a four-bedroom home, top-of-the-range mod cons and two vehicles including a Mercedes people carrier.

Father-of-seven Peter gave up work because he could make more living on benefits. Yet he and his wife Claire are still not happy with their lot.

With an eighth child on the way, they are demanding a bigger house, courtesy of the taxpayer.

‘It’s really hard,’ said Mrs Davey, 29, who is seven months pregnant. ‘We can’t afford holidays and I don’t want my kids living on a council estate and struggling like I have.”

It is about time that the David Cameron government fixes social spending issues such as the above and puts the British economy back on the right track.