All Latin American Bank Stocks Are In The Red

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Among the foreign bank stocks trading on the US exchanges, all the Latin American bank stocks are down year-to-date as of last Friday (July 16, 2021) in addition to Credit Sussie (CS) of Switzerland. Credit Sussie is down about 24% due to multiple corruption and other charges currently ongoing against the bank. Chilean banks plunged dramatically a few months ago due to political issues there.  South America’s economic powerhouse with a strong democratic political system has been rocked by protests last year and continues to struggle despite a powerful rally in copper prices this year. Chile is the world’s largest copper exporter.

Update (9/4/22): On The Performance of Foreign Foreign Bank Stocks Year-to-Date

Similarly Colombia has also suffered its share of protests in the past few months and the country is struggling with the onslaught of the raging Covid-19. Brazil continues to prove that it is “the country of the future” and always remain so. Argentina is unable to shake-off its economic and structural issues for many years now and will remain the basket case of mismanagement. Ironically  the country has the largest concentration of Italians that immigrated there many decades ago. Italy used to a poster child for economic problems just a few years ago during the many European sovereign debt crisis. Italy was part of the “PIIGS” countries which included Portugal, Ireland, Greece and Spain.

Overall political risk is a major in emerging market investing and Latin American  proves that point so clearly.

The year-to-date returns of Latin American bank stocks trading on the US exchanges are shown below:

S.No.Bank NameTickerLast Friday Close PriceYear-to-Date Change(%)
1Itau CorpbancaITCB$3.65-26.26%
2BancolombiaCIB$30.14-24.99%
3Credicorp LtdBAP$118.80-24.62%
4Banco de ChileBCH$17.66-13.35%
5Banco BradescoBBD$4.73-10.08%
6Banco Santander BrasilBSBR$7.79-9.84%
7Banco MacroBMA$14.10-9.44%
8Itau UnibancoITUB$5.64-7.39%
9Grupo Financiero GaliciaGGAL$8.18-6.41%
10Banco Santander ChileBSAC$17.83-6.11%
11Banco BBVA Argentina S.A.BBAR$3.14-2.18%
12Foreign Trade Bank of Latin America IncBLX$15.23-2.06%

Source: BNY Mellon

Disclosure: Long CIB, ITCB, BBD, ITUB and BCH

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Quick Check on the Performance of U.S. Airline Stocks so far This Year

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US airline stocks soared last year towards the end of the year when a vaccine for Covid-19 was discovered. When Covid-19 started raging in the country in early last year the airline sector was one of the worst affected in addition to other sectors like hospitality and restaurants. This year though the story is different. Despite millions of Americans flying both domestically and some internationally, airline stocks have not great returns relative the overall market. It remains to be seen if airline stocks can outperform the market this year.

For instance, the S&P 500 is up nearly 17% year-to-date. But among the major four carriers, only American Airlines ( AAL) has shot up by over 25%. Rest of them have average returns with Delta(DAL) turning negative as shown in the chart below:

Click to enlarge

Source: Yahoo Finance

The year-to-date return chart of all listed US airlines are displayed in the following chart:

Click to enlarge

Source: Yahoo Finance

Among the risks that airline stocks face this year is the spread of the Delta variant in the US. Unvaccinated people primarily from Southern and Mid-western states traveling freely via airports and flying in planes are a potential risk factor not only to airline stocks but more importantly to fellow passengers and others.

Referenced Tickers:

  • Alaska Air Group, Inc. (ALK)
  • Delta Air Lines, Inc.(DAL)
  • Southwest Airlines Company (LUV)
  • Spirit Airlines, Inc. (SAVE)
  • Allegiant Travel Company (ALGT)
  • American Airlines Group, Inc. (AAL)
  • Frontier Group Holdings Inc (ULCC)
  • Hawaiian Holdings, Inc. (HA)
  • JetBlue Airways Corporation (JBLU)
  • Mesa Air Group, Inc. (MESA)
  • SkyWest, Inc. (SKYW)
  • United Airlines Holdings, Inc. (UAL)

Disclosure: No Positions

The Top Ten Gold Producing Countries in 2020: Chart

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The Top Ten Gold Producing Countries in 2020 is shown in the chart below. It is surprising that China was the top producer with over 368 tonnes followed by Russia and Australia. South Africa, the traditional leader in gold production is missing in this list. In fact, among African countries only Ghana made it to the list at number six.

Click to enlarge

Source: UPDATED: Top 10 Gold Producing Countries, U.S. Global Investors

On a related note, the SPDR Gold Trust ETF is down over 7% YTD. In the past five years the fund has grown by 33%. Despite fears of inflation and equities too expensive, gold hasn’t had a great run so far this year. It remains to be see if gold benefits from any correction or crash in the equity market.

Related ETF:

  • SPDR Gold Trust (GLD)

Related stock lists:

Disclosure: No Positions

Apple’s Market Cap is Now Larger Than The Entire Australian Stock Market

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Apple(APPL), the world’s already most valuable company is getting even more valuable. Last week Apple’s stock jumped to closed at another record. As of yesterday the market cap was $2.4 Trillion. With Friday’s closing at $145.11 the stock us up over 12% year-to-date. Over the past five years the stock has soared by over 487%.

Currently the P/E exceeds 32 and the dividend yield is 0.61%. The outstanding shares have been increasing as well over the past few years. Apple has over 16 billion shares outstanding.

From an Australian perspective, Apple’s market cap based on Friday’s close is $3.24 Trillion Australian Dollars. The market cap of the entire Australian Stock Market as represented by all the companies listed on the ASX is $2.75 Trillion AUD. So Apple’s market cap is larger than the ASX by 18%. This is indeed astonishing !. One single US company is now worth more than all the companies on the Australian Securities Exchange.

The million dollar question is why is there no Australian company that can compete against Apple. Despite being a developed country, countries like Australia are unable to create companies that are innovative and be able to compete at the global level. So from a technological industry perspective, Australia is more like any other developing country. It is not just Australia that lag miserably in technical innovation. Canada, the UK and entire Europe is filled with also-run companies in the tech industry.

Click to enlarge

Source: Yahoo Finance

Hat Tip: Market Index. Australia

Disclosure: No Positions

Are Mega Cap Tech Stocks Today’s Best Value Stocks?

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Value stocks have outperformed growth stocks so far this year. Value stocks are generally considered “cheap” and are good value for the money. Hence as the US economy is in recovery mode value stocks have roared back from the depths of last year’s pandemic nightmare. While there hundreds of value stocks in the US market, one wouldn’t consider the mega cap tech stocks as value stocks. So I was intrigued when I came across a story at FirstLinks that argued that mega cap tech stocks are today’s best value stocks and made the case for investment in them.

Of the six mega cap stocks, four are US-based and are shown below:

Facebook has a market cap of over $980.0 billion and the  P/E is over 30. Amazon has double the market cap at over $1.90 Trillion and the P/E is about 70. Microsoft’s market cap is $2.1 Trillion and Alphabet’s is over $1.70 Trillion. Only Microsoft pays a dividend.

Andrew Macken, the author of the FirstLinks piece mentions three reasons why these stocks are cheap. Of those the following is interesting:

3. Current valuations are too conservative

The final reason that mega-tech stocks are great value is their attractive valuations. Our analysis shows that the expectations baked into the current stock prices of our big-tech names are far too conservative.

  • In the case of three dominant US cloud providers, Amazon, Microsoft and Alphabet, for example, their implied collective annual cloud revenues by 2030 are in the order of just $650 billion higher than current levels, according to consensus estimates. This is a tiny fraction of the $8 trillion increment that Microsoft CEO Nadella expects to accrue to the tech space over the next decade. If Nadella’s forecast above is even remotely accurate, then these cloud providers will see much higher revenues (and earnings) in 2030 than what is currently being implied by consensus estimates.

  • Next, consider Tencent and Alibaba, the latter of which has of course suffered greatly from the Jack Ma saga, with the billionaire Alibaba founder’s fintech Ant Group IPO pulled at the last minute and with Ma reportedly under serious pressure from Chinese regulators and Government. In both cases, despite owning some of the most valuable data ecosystems in China and South-East Asia – including being the two dominant cloud providers on the Mainland – their respective stock prices imply very conservative sets of expectations. Said another way, if revenue growth for these businesses were to fall from healthy-double-digits, to just single-digits by 2025, an investor today would still make money, based on Montaka’s analysis.

  • And finally, the biggest head-scratcher of them all is Facebook, which is priced at a forward earnings multiple of just 14x. Some of the businesses trading at a higher multiple than this today include Australia’s Wesfarmers, Scentre Group, and plumbing parts supplier, Reece. At the current stock price, the market is effectively giving investors all of the upside from eCommerce, the monetisation of the creator economy, WhatsApp, Messenger and Reels, as well as Facebook’s growth in VR/AR for free!

Source: Why mega-tech growth are the best ‘value’ stocks in the market, FirstLinks

The entire article is worth a read.

Based on many of the assumptions the author makes even a 10.0 Trillion market cap for these companies sounds conservative indeed….

Disclosure: No Positions