The AFI Magazine – Issue #3(December 2008) of UK says:
“A quarter of the FTSE 350 could cut or scrap dividends in the next 12 months because of the economic environment“. (emphasis added)
Due to the above, a panel of fund advisers suggest staying away from cyclicals like basic materials, industrials and service sectors.
The Adviser Fund Index (AFI) Magazine is published by Trustnet UK and Financial Express.
Emerging market stocks were all the rage up until the middle of last year. Stocks from Brazil, India, Russia and China (BRIC) were gobbled up by investors like there was no tomorrow. However the credit crunch has hit the emerging markets harder than developed markets last year. In fact the US markets performed better than European and emerging markets.
In 2009 some folks believe that the developing countries like China,Brazil, India, Turkey, South Africa, etc. will lead us out of the mess. However some argue that since the credit crunch started in the USA, the US economy has to first improve before other markets can. In the end nobody knows for sure how this will play out.
Hundreds of emerging market stocks trade in the US. In addition, there are many ETFs, Mutual Funds, CEFs that track these markets. One way to identify the top companies in the developing markets is to analyze an index related to that market. In order to identify the top 100 ADRs for this market, I list below components of the JPMorgan Depositary Receipt (DR) Emerging Markets 100 Index.
JPMorgan Depositary Receipt (DR) Emerging Markets 100 Index:
“is a market capitalization-weighted index designed to track the performance of 100 of the largest and most liquid Exchange-listed Depositary Receipt securities from countries classified as emerging markets.”
Components:
CHINA MOBILE LTD (CHL)
OAO GAZPROM (OGZPY)
CIA VALE DO RIO DOCE (RIO)
PETROBRAS – PETROLEO BRASILEIRO SA (PBR)
ROSNEFT OIL CO (ROSN.GB)
LUKOIL (LUKOY)
AMERICA MOVIL SAB DE CV (AMX)
TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD (TSM)
TEVA PHARMACEUTICAL INDUSTRIES (TEVA)
POSCO (PKX)
SASOL LTD (SSL)
TENARIS SA (TS)
CHINA LIFE INSURANCE CO LTD (LFC)
BANCO ITAU HOLDING FINANCEIRA SA (ITU)
BANCO BRADESCO SA (BBD)
MOBILE TELESYSTEMS OJSC (MBT)
VIMPEL-COMMUNICATIONS (VIP)
CIA SIDERURGICA NACIONAL SA (SID)
PETROCHINA CO LTD (PTR)
CHUNGHWA TELECOM CO LTD (CHT)
EVRAZ GROUP SA (EVR)
CHINA UNICOM LTD (CHU)
INFOSYS TECHNOLOGIES LTD (INFY)
URALKALI (URKA)
KOOKMIN BANK (KB)
NOVATEK OAO (NVTK)
CEMEX S.A.B. DE C.V. (CX)
VTB BANK OJSC (VTBR)
ICICI BANK LTD (IBN)
CHINA PETROLEUM & CHEMICAL CORP (SNP)
SEVERSTAL (SVST)
SK TELECOM CO LTD (SKM)
FOMENTO ECONOMICO MEXICANO SAB DE CV (FMX)
TURKCELL ILETISIM HIZMET AS (TKC)
TELEFONOS DE MEXICO SAB DE CV (TMX)
NOVOLIPETSK STEEL (NLMK) (NLMK.GB)
GRUPO TELEVISA SA (TV)
GERDAU SA (GGB)
UNIBANCO – UNIAO DE BANCOS BRASILEIROS SA (UBB)
ORASCOM CONSTRUCTION INDUSTRIES (ORSDF)
PHILIPPINE LONG DISTANCE TELEPHONE CO (PHI)
AFK SISTEMA (SSA.GB)
HDFC BANK LTD (HDB)
AU OPTRONICS CORP (AUO)
LG DISPLAY CO LTD (LPL)
MECHEL OAO (MTL)
ORASCOM TELECOM HOLDING SAE (ORSTF)
ANGLOGOLD LTD (AU)
TATNEFT (ATAD)
KAZMUNAIGAS EXPLORATION PRODUCTION (KMG)
BAIDU.COM, INC. (BIDU)
STERLITE INDUSTRIES INDIA LTD (SLT)
CIA DE MINAS BUENAVENTURA SA (BVN)
CHINA TELECOM CORP LTD (CHA)
SATYAM COMPUTER SERVICES LTD (SAY)
SUNTECH POWER HOLDINGS CO LTD (STP)
X 5 RETAIL GROUP NV (FIVE)
EMPRESA BRASILEIRA DE AERONAUTICA SA (ERJ)
GOLD FIELDS LTD (GFI)
TMK OAO (TMKOY )
ARACRUZ CELULOSE SA (ARA)
CIA ENERGETICA DE MINAS GERAIS (CIG)
CIA BRASILEIRA DE DISTRIBUICAO GRUPO PAO DE ACUCAR (CBD)
TELE NORTE LESTE PARTICIPACOES SA (TNE)
TERNIUM S.A. (TX)
VIVO PARTICIPACOES SA (VIV)
LDK SOLAR CO LTD (LDK)
VOTORANTIM CELULOSE E PAPEL SA (VCP)
FOCUS MEDIA HOLDING LTD (FMCN)
SILICONWARE PRECISION INDUSTRIES CO (SPIL)
HARMONY GOLD MINING CO LTD (HMY)
SOCIEDAD QUIMICA Y MINERA DE CHILE SA (SQM)
TIM PARTICIPACOES SA (TSU)
NETEASE.COM (NTES)
TAM SA (TAM)
ALUMINUM CORP OF CHINA LTD (ACH)
CTRIP.COM INTERNATIONAL LTD (CTRP)
RANDGOLD RESOURCES LTD (GOLD)
WIMM-BILL-DANN FOODS OJSC (WBD)
DESARROLLADORA HOMEX SAB DE CV (HXM)
YANZHOU COAL MINING CO LTD (YZC)
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP (EDU)
JA SOLAR HOLDINGS CO LTD (JASO)
BRASIL TELECOM PARTICIPACOES SA (BRP)
SHANDA INTERACTIVE ENTERTAINMENT LTD (SNDA)
GAFISA S.A. (GFA)
GIANT INTERACTIVE GROUP INC (GA)
YINGLI GREEN ENERGY HOLDING CO LTD (YGE)
PERFECT WORLD CO LTD (PWRD)
RENESOLA LTD (SOL)
WUXI PHARMATECH CAYMAN INC (WX)
TRINA SOLAR LTD (TSL)
E-HOUSE CHINA HOLDINGS LTD (EJ)
SOLARFUN POWER HOLDINGS CO LTD (SOLF)
CHINA DIGITAL TV HOLDING CO LTD (STV)
GREAT EASTERN ENERGY CORPORATION LTD (GEEC)
GUSHAN ENVIRONMENTAL ENERGY LTD (GU)
HOME INNS & HOTELS MANAGEMENT INC (HMIN)
CHINA FINANCE ONLINE CO LTD (JRJC)
CHINA SUNERGY CO LTD (CSUN)
Two Brazilian steel making companies are already up 25% so far this year.With the first full trading week over, I was researching for the top performing ADRs. The two steel companies kinda stood out because of the rise in stock prices.
Commodity prices have fallen tremendously in the past few months and steel was no exception. As the demand for commodities like silver, steel, plastics, tin, aluminum, etc. collapsed companies manufacturing those commodities got slaughtered. Alcoa recently announced on a big layoff and cut in production due to lower demand for aluminum. Construction is slowing worldwide. Hence demand for steel should be going down which would make the steel stocks go down as well. However that is not happening now. Steel stocks are rising.
Apparently the steel makers have cut production to reduce the supply as the demand has fallen. CommodityOnline.com says: “The slaughter undergone by steel prices recently seems to be over; announcements from steel producers that they are slashing output has apparently persuaded the market that they mean business about getting supply closer balanced with likely future demand.” Demand may pick in the USA if the Obama stimulus plan is implemented which may invest heavily in infrastructure upgrade.
Brazilian Steel Stocks:
1.Companhia Siderurgica Nacional (SID) is up 25.76% year-to-date as of market close past Friday. SID is a fully integrated steel producer making many related products. In addition to steel the company limestone, dolomite and tin. SID pays a dividend of 1.12% and the annual revenue growth is about 25% in the past five years. As per an S&P; Quantitative Stock Report dated Jan 3, 2009 a $10,000 investment in SID 5 years ago would have grown to $46,217 for a return of 462%.
2.Gerdau S.A. (GGB) operates 43 factories in Latin America and North America. The current yield is 1.88%. Annual earnings growth in the last 5 years is 47%. In 2008 the company had about $20 B in revenues.
As the commodity prices continue to make wild moves in 2009, it will be interesting to watch the sector stocks. Though the steel prices seem to be stabilizing now investing in stocks in this sector is highly risky. Only those investors who have stomachs for gut-wrenching roller coaster rides must invest in commodity stocks.
The following table lists eight Consumer Staples ADR stocks. These picks are components of the S&P ADR Index which “is made up of those companies from the S&P 700 that offer either Level II or Level III American Depository Receipts (ADRs), global shares, or ordinary shares in the case of Canadian equities.”
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