In 1979, the S&P 500 had a 5.53% yield. But since 1990, it has steadily decreased  and reached a low of 1.89% in 2007. In 2008, the yield rose to 3.11%. The current yield of just over 2% is very low. This is because many U.S. companies believe in reinvestment or retained capital as opposed to paying out a higher portion of profits to investors as dividends. In November last year, the Journal reported that the 500 largest non-financial companies by assets in the U.S. had stashed about $994 billion in cash and short-term investments.

The chart below shows the current dividend among G-7 countries:

Source: Pensions & Investments

Except Japan, all other countries have higher yields than the US. European companies traditionally have had higher payout ratios and continue to follow that policy.

The following 13 Foreign Stocks have Dividend Yields of Over 5%:

• US Gold Reserves totaled 8,133.5 tons in September 2008, accounting for 76.5% of its forex reserves
• Japan holds 765.2 tons of gold which accounts to 1.9% of its forex reserves
• China’s gold reserves amounted to 1,054 tons in 2009 which was a 76% increase in six years and accounts for 1.9% of its forex reserves
• China surpassed South Africa as the world’s largest gold producer in 2007
• China beat India as the world’s largest gold consumer in 2009

From the World Gold Council:

“The value of gold, in terms of the real goods and services that it can buy, has remained largely stable for many years. In 1900, the gold price was $20.67/oz, which equates to about $503/oz in today’s prices. In the five years to end-December 2008, the price of gold averaged around $606. So the real price of gold has endured a century characterised by sweeping change and repeated geopolitical shocks and more than retained its purchasing power. In contrast, the real value of most currencies has generally declined.”

Some of the Global Tier1 Gold Miners are:

1. Company: Yamana Gold Inc (AUY)
Country: Canada

2. Company: GoldCorp Inc (GG)
Country: Canada

3. Company: Polyus Gold (OTC: OPYGY)
Country: Russia

4. Company: Harmony Gold Mining Company Ltd (OTC: HGMCF)
Country: South Africa

5. Company: Lihir GOld (LIHR)
Country:Papua New Guinea

6. Company:AngloGold Ashanti(AU)
Country: South Africa

7. Company: Zijin Mining Group Ltd
Country: China

8. Company: Barrick Gold Inc (ABX)
Country: Canada

9. Company: Newcrest (OTC:  NCMGY)
Country: Australia

10. Company: Gold Fields
Country: South Africa

11. Company: Kinross Gold Corp (KGC)
Country: Canada

12. Company: Newmont Mining Inc (NEM)
Country: USA

13. Company: Compania de Minas Buenaventura SA (BVN)
Country: Peru

14. Company: Freeport McMoRan Copper and Gold Inc (FCX)
Country: USA

For investors that prefer to invest in gold via an ETF, the SPDR Gold Shares Trust (GLD) offers one option. This ETF tracks the price of gold. The Trust’s allocated gold bullion is kept in the form of London Good Delivery bars with custodian HSBC Bank USA in its London vault or in the vaults of sub-custodians. The fund has $39B in assets and the expense ratio is 0.40%. Zijin Mining Group Ltd is one of the largest gold producers in China.

Built on a Lie - The Fundamental Flaw of Europe’s Common Currency

A new forecast from RBC Economics says Canada’s economy is poised for real GDP growth of 3.1 per cent this year and 3.9 per cent in 2011. Canadian economy ready for major rebound, RBC says

Debt doom ahead US Congressional Budget Office figures, showing how horrendously large the national debt will become, indicate that the United States economy will be 71% bigger within 10 years. If everything costs twice as much by then, why not? And the only people better off will be those who are buying gold now!!!

China showing signs of overheating

CHINA’S industrial output has hit a five-year high, adding to the case for the Government to pare back stimulus measures.

The graph below shows the possible futures for the economies of China and the US:

Source:  Towards a new reserve currency system?, OECD Observer

Chart showing the projected growth of GDP in Developed and Emerging Markets thru 1950:

After the World War II, the US dollar dethroned the British sterling to become the world’s reserve currency. The dollar accounts for about two-thirds of the global reserves and 88% of daily foreign exchange trades.

From the OECD Observer article noted above:

“The additional demand for dollars has generated “seigniorage” revenues: in 2008 the US Fed made a net interest income of $43 billion from issuing the currency, which as The Economist newspaper once put it, effectively makes US dollars in global circulation an interest-free loan by the public to the nation’s central bank.”

Empires based on currency rise and fall according  to Professor Avinash Persaud. In his 2004 speech titled “When Currency Empires Fall”  he noted the following:

“There are good reasons why there is seldom more than one dominant currency. Reserve currencies have the attributes of a natural monopoly or in more modern parlance, a network. If it costs extra to trade with some one who uses a different currency than you, it makes sense for you to use the currency that most other people use, this makes that currency yet bigger and cheaper to use. There is a good analogy with a computer operating system. In that world, Windows is the dollar.

This networking power is why Central banks store dollars in their reserves in a far greater proportion than the proportion of trade with the US. While 30% of international trade is with the US, 70% of central bank reserves are in dollars. It is why most commodities, like oil, copper and coffee are priced in dollars, wherever they are found and whoever they are sold to.

Something else we can be more certain of is that reserve currencies come and go. They don’t last forever.  International currencies in the past have included the Chinese Liang and Greek drachma, coined in the fifth century B.C., the silver punch-marked coins of fourth century India, the Roman denari, the Byzantine solidus and Islamic dinar of the middle-ages, the Venetian ducato of the Renaissance, the seventeenth century Dutch guilder and of course, sterling and now the dollar.

A necessary condition of a currency becoming a reserve currency appears to be its breadth of use and cost and ease of transaction, not, as some might think, the ability to hold its value. Clearly hyperinflation would not serve a reserve currency, and the end of reserve currency status is often associated with a cycle of inflation. But within the normal bands of inflation, it is size as a trader that matters. In the long-term, the Swiss franc and yen have been better stores of value than the dollar. Since 1980, they have appreciated by more than 21% and 54% versus the dollar respectively. Yet for much of this time, combined, they have represented no more than 10% of central bank reserves.

In the 18th century Britain was the largest economy of the western world, London was the centre of international trade and finance, the currency was convertible and so sterling became the world’s reserve currency. By the late 19^th century, the US had become the world’s largest economy, a position solidified by Europe’s repeated attempt at self-annihilation from the 1880s to the 1940s. By the 1960s, the dollar had usurped sterling and was the world’s new reserve currency with 60% of total central bank reserves being held in dollars, twice the level of sterling reserves.

But time doesn’t stop. By the mid-21st century, the US will no longer be the world’s largest economy. By then, China and India will have overtaken the US, western Europe and Japan, on purchasing power parity terms at least, which should represent where exchange rates are likely to be in the long-run. Indeed optimistic measures of sustainable growth in China and India suggest this will be the case in twenty years time. Ladies and gentlemen, within my life time, the dollar will start to lose its reserve currency status, not to the euro, but to the renminbi.”

According to the latest Treasury data, the Chinese hold $ 894.8 billion of US Treasury securities as of December 2009. China is the largest creditor nation in the world while the US is the largest debtor nation. The Chinese renminbi may become the global reserve currency by 2050 since its economy in terms of purchasing power parity is projected to outstrip the US economy. However China has to make its currency fully convertible, remove restrictions on foreign capital entering and leaving the country, accelerate financial reforms before the renminbi can become the world’s currency of choice.

From the magazine report:

“All selections were made by the editors of Global Finance, after extensive consultations with bankers, corporate financial executives and analysts throughout the world. In selecting these top banks, we considered factors that range from the quantitative objective to the informed subjective. Banks were invited to submit entries supporting their selection. Amid nominally objective criteria were growth in assets, profitability, geographic reach, strategic relationships, new business development and innovation in products. Subjective criteria included the opinions of equity analysts, credit rating analysts, banking consultants and others involved in the industry.”

The World’s Best Developed Market Banks for 2010 are:

Source: Global Finance

Among the banks in the U.S., one of the four supers JP Morgan Chase (JPM) was ranked the best bank. After last year’s low in March Chase has rebounded well and closed at $42.81 yesterday.Royal Bank of Canada(RY), the winner from Canada has a 3.45% dividend yield now.The bank is a consistent long-term performer.

Some of the notable top ranked banks in Europe were ING(ING) of Belgium, Danske Bank (OTC: DNSKY) of Denmark, BNP Paribas(OTC: BNPQY) of France and Deutsche Bank(DB) of Germany. Santander(STD) of Spain was the winner in both Spain and the UK.

Santander rebranded the British banking brands Abbey National, Alliance & Leicester and Bradford & Bingley under the Santander name this year.Santander has about 1,300 branches in the UK. While its competitor Societe Generale(OTC: SCGLY) is still suffering from losses, BNP Paribas survived the credit crisis and remains strong. Its fourth quarter earnings more than doubled but the bank raised its dividend  by 50%.

DBS Group Holdings (OTC: DBSDY) of Singapore currently pays a 3.99% dividend.

The Top 10 components in the Dow Jones Switzerland Titans 30 Index are:

1. Company: Novartis AG (NVS)
Sector: Health Care
Current Dividend Yield: 3.66%

2. Company: Nestle S.A. (OTC: NSRGY)
Sector: Consumer Goods
Current Dividend Yield: 2.45%

3. Company: Roche Holding AG (OTC: RHHBY)
Sector: Health Care
Current Dividend Yield: 3.24%

4. Company: ABB Ltd (ABB)
Sector: Industrials
Current Dividend Yield: 2.10%

5. Company: Credit Suisse Group (CS)
Sector: Financials
Current Dividend Yield: 0.20%

6. Company: UBS AG (UBS)
Sector: Financials
Current Dividend Yield: N/A

7. Company: Zurich Financial Services AG (OTC: ZFSVY)
Sector: Financials
Current Dividend Yield: 3.99%

8. Company: Syngenta AG (SYT)
Sector: Basic Materials
Current Dividend Yield: 1.95%

9. Company: Compagnie Financiere Richemont S.A.
Sector: Consumer Goods
Current Dividend Yield: N/A

10. Company: Holcim Ltd (OTC: HCLMY)
Sector: Industrials
Current Dividend Yield: N/A

Nestle(ABB) is the world’s largest food company with a strong presence in many emerging markets. Nestle is also the owner of some of the most popular brands in the world like Nescafe, Nesquik, Milo, etc. For 2009, the company earned $9.58B. Last month Nestle announced plans to increase its dividend by 14.3% and buy back shares worth 10 billion Swiss francs this year.ABB (ABB) is a global provider of power and automation equipments and services to utilities and other industrial customers. It is a major player in countries like India, China, Brazil, etc where there is a strong buildup in infrastructure. In the fourth quarter of 2009, revenues fell to $8.76B but profit more than doubled to $540M.

Resorts World Sentosa Casino, Singapore (Courtesy: Malaysia Finance)

The government of Singapore is famous for its forward-thinking and enacting policies that are growth-oriented. One of its visions was to transform Singapore into an entertainment mecca in Asia and attract visitors from the around the world especially from the fast-growing markets of China, India, etc. As part of this initiative, the country allowed the building of its first casino a few years ago. Resorts World Sentosa is an integrated complex that includes a casino, an Universal Studios theme park, hotels, shopping plazas, etc. The casino opened its doors on Feb 14th, the first day of the Chinese Year of the Tiger. Another casino resort named Marina Bay Sands and built by Las Vegas Sands is  slated to be opened soon in the downtown business district. Once both the casinos are fully operational,  they are projected to earn $2.1B in revenues this year according to CLSA Asia-Pacific markets. Most of the visitors are expected to be from overseas mainly from China as the casinos will charge a S$100 entrance fee for each 24 hours for Singaporeans.

In order to prevent over-growth of population and to protect local wages Singapore announced proposals last week to curtail immigration. Overall Singapore is in a relatively better shape compared to other developed countries. The opening of casinos and the theme park should provide additional growth to the local economy.

The iShares MCSI Singapore Index Fund (EWS) tracks the performance of the Singapore equity market.There are 30 holdings in the portfolio and the fund has total assets of about $1.5B. Two of the leading Singapore banks are United Overseas Bank (OTC: UOVEY) and DBS Group Holdings (OTC: DBSDY). Both the banks are well capitalized and have a large presence in other Asian countries as well. To answer my title question, Singapore stocks should perform well if the global economic recovery continues.

Despite the current chaos  in the European Union, some good investment choices can be found in these countries. An article in the latest edition of Bloomberg BusinessWeek lists a few stocks from PIIGS that are liked by fund managers.

The stocks listed in the article are noted below:

1. Portugal

Energias de Portgual (OTC: EDPFY)  is an electric and natural gas utility with strong presence in Spain, Portugal, France and Belgium. Its alternative energy subsidiary EDP Renovaveis has wind energy projects in the early stages in Illinois, Indiana and Ohio. The current dividend yield is 5.15%.

Portugal Telecom (PT)  offers telecom services  in Portugal, Brazil and a few countries in Africa. PT pays a dividend of 7.10%.

2. Ireland

The holding company DCC which has interests in food, energy and health care. DCC is not traded on the US markets.

3. Italy

Ansaldo Sts Spa (OTC: ASDOF)  is a builder of railways and subways. The company earns more than 50% of its revenues from outside of Italy and has a strong backlog of orders.

4. Greece

National Bank of Greece (NBG)  does not pay regular dividends. The stock has fallen heavily in recent months and closed at $3.95 today.The bank’s deposits exceeds loans.

5. Spain

The telecom giant Telefonica(TEF)  gets a significant portion of its revenues from Latin America. Telefonica’s current yield is 6.34%.

Banco Santander (STD) also gets more than 50% of its profits from outside the Euro zone. The stock pays a 5.26% dividend. Santander has large exposure in North and South America. In the US, it bought the Sovereign Bank during the credit crisis in 2008.

In another article titled The Pain in Spain falls Mainly on the Cajas, author Mark Scott notes that the main reason the Spanish banking giants Banco Santander (STD) and BBVA (BBV) remain strong despite the troubled economy is that bad real estate loans have hit mostly the the non-profit lending institutions known as Cajas. Hence investors need not totally avoid Santander and BBVA.

From the article titled Downunder Dogs:

“Flea-bitten may be a bit harsh for some of these stocks but they are nevertheless this month’s Downunder Dogs – the stocks with the highest dividend yields among the largest 50 companies on the Australian Stock Exchange.

So what qualifies them as dogs? If you make the rather simplistic assumption that dividend levels remain more or less stable, then the dividend yield should rise as the share price falls. So by buying companies with high dividend yields you are buying shares that are out of favour – hence, “dogs”. And why would you want to buy a dog? The theory – based on the US stock-picking system known as the Dogs of the Dow – is that this year’s dogs often turn out to be next year’s prize pooches. Do you own these puppies?”

Source: Australian Financial Review

The following are some of the reasons to invest in Australia:

1. Australia is one of the few OECD countries to successfully weather the global financial crisis and it was the first G20 country to tighten the monetary policy by raising the key interest rate last October.
2. The country enjoyed consecutive economic growth for 17 years from 1992 to 2008 and is best positioned to participate in the growth of Asian markets of India and China due to its close proximity and natural resources.
3. The fiscal position is relatively strong and the current account averages just 4.5% of the GDP.
4. Many of Australia’s major export markets are in the vibrant and growing Asia including the countries of China, Japan, India, South Korea making it less dependent on the US and European countries.
5. Australian companies generally have higher dividend yields than most US companies.
6. Some of the Australia’s large exports are coal, iron ore, wheat, alumina, etc. Australia is the largest exporter coal in the world and China is the largest consumer of Australian coal. On the services sector, education has become a major export with Australian universities attracting thousands of students from the emerging markets of Asia.
7. The unemployment rate as of January,2010 is just 5.4% which is much lesser than the OECD average.
8. Australia’s equity market has been the best performing market for the past 110 years since 1900 with a real return of 7.5% per year.
9. Australia has the political risk is the lowest in the region.
10. The regulatory environment is strong but business friendly. A recent IMF study confirmed that Australian banks remained sound during the global credit crisis.

How to Invest in Australia?

The simplest and easiest way to invest in Australia is via the iShares MSCI Australia Index ETF (EWA). The fund has an asset base of about $2.2B and contains most of the the large companies there. Another way is to go with the closed-end for Aberdeen Australia Equity Fund (IAF). The expense ratio is 1.73% and the fund has total assets of about $208M. A third alternative is to invest directly in Australian equities. Some of the ADRs available are National Australia Bank (OTC: NABZY), Westpac Banking (WBK), Australia and New Zealand Banking Ltd (OTC: ANZBY), BHP Billiton (BHP), etc. The complete list of Australian ADRs can be found here and here.

The Top 10 Constituents in the ETFLab DAXplus® Maximum Dividend ETF are:

1. Deutsche Telecom (DT)
Current Dividend Yield of Xetra Listed Equity(EUR): 9.78%
Current Dividend Yield of ADR: 8.04%

2. RWE AG (OTC: RWEOY)
Current Dividend Yield of Xetra Listed Equity(EUR): 7.10%
Current Dividend Yield of ADR: 6.89%

3. Hannover Rueckversicherungs (OTC: HVRRY)
Current Dividend Yield of Xetra Listed Equity(EUR): 7.08%
Current Dividend Yield of ADR: N/A

4. Wincor Nixdorf AG (WNXDY)
Current Dividend Yield of Xetra Listed Equity(EUR): 7.07%
Current Dividend Yield of ADR: 3.85%

5. E.ON AG (OTC: EONGY)
Current Dividend Yield of Xetra Listed Equity(EUR): 6.84%
Current Dividend Yield of ADR: 5.63%

6. Muenchener Rueckvers AG (OTC: MURGY)
Current Dividend Yield of Xetra Listed Equity(EUR): 6.54%
Current Dividend Yield of ADR: 4.69%

7. Duestche Post AG
Current Dividend Yield of Xetra Listed Equity(EUR): 5.94%
Current Dividend Yield of ADR: N/A

8. Allianz SE
Current Dividend Yield of Xetra Listed Equity(EUR): 5.76%
Current Dividend Yield of ADR: N/A

9. Symrise AG (OTC: SYIEY)
Current Dividend Yield of Xetra Listed Equity(EUR): 5.24%
Current Dividend Yield of ADR: 3.19%

10. Bilfinger Berger AG (OTC: BFLBY)
Current Dividend Yield of Xetra Listed Equity(EUR): 4.61%
Current Dividend Yield of ADR: N/A

RWE AG and EON AG are two of the largest electric and gas utilities in Germany with operations in  other European countries as well. EON’s U.S. Midwest unit focuses primarily on the electricity and gas utility sectors in the state of Kentucky.Deutsche Telecom (DT) operates the T-Mobile cell phone service in the U.S.

1. YPF SA(YPF)
Current Dividend Yield: 7.85%
Country: Argentina
Sector: Integrated Oil & Gas

2. TOTAL (TOT)
Current Dividend Yield: 6.09%
Country: France
Sector: Integrated Oil & Gas

3. Philippine Long Distance Telephone Co(PHI)
Current Dividend Yield: 5.75%
Country: Philippines
Sector: Telecom

4. ENI Spa(E)
Current Dividend Yield: 6.09%
Country: Italy
Sector: Integrated Oil & Gas

5. E.ON AG (OTC: EONGY)
Current Dividend Yield: 5.63%
Country: Germany
Sector: Electric Utility

6. Fortum(OTC: FOJCY)
Current Dividend Yield: 5.16%
Country: Finland
Sector: Electric Utility

7. Ecopetrol (EC)
Current Dividend Yield: 5.57%
Country: Colombia
Sector: Integrated Oil & Gas

8. Portugal Telecom (PT)
Current Dividend Yield: 7.10%
Country: Portugal
Sector:  Telecom

9. National Australia Bank Ltd(OTC: NABZY)
Current Dividend Yield: 5.60%
Country: Australia
Sector: Banking

10. Banco De Chile (BCH)
Current Dividend Yield: 6.29%
Country: Chile
Sector: Banking

11. Veolia Environnement(VE)
Current Dividend Yield: 5.16%
Country: France
Sector: Environmental Management Services

National Australia Bank trades on the OTC markets. The stock has more than doubled from its 52-week lows. Finland-based electric utility Fortum is a consistent high dividend paying company. Fortum’s average dividend payout ratio of 50% to 60%. Last year, sales totalled EUR 5.4 billion and the operating profit was EUR 1.8 billion.  E.ON AG of Germany is another top electric utility that offers stable and consistent growth.

Note: The data shown here are known to be accurate from the sources used. Please make your own due diligence before making any investment decisions.

The prevailing low interest rates in many countries around the world and the rising demand for commodities are two of the reasons that are advantageous to frontier markets.  For example, rising crude oil and natural gas prices are benefiting Kazakhstan. Saudi Arabia, Qatar, Nigeria, Oman and Kuwait are profiting from higher crude oil prices.

The performance of a select few frontier markets and India, China are shown in the following chart:

A recent research report noted:

“Mark Mobius, executive chairman of Templeton Asset Management believes frontier markets represent some of the best contrarian investments at the moment.

Mobius, who manages a number of emerging markets portfolios at Franklin Templeton, considers countries such as Vietnam, Pakistan, Bangladesh and Romania as ones to watch this year. He says he currently favors commodity and consumer orientated stocks. Qatar, Kazakhstan and Nigeria are being watched because of their natural resources.”

A huge bubble is forming in the emerging markets of India and China especially in the real estate sector. This does not portend well for the future. The real estate bubble in the US lead to the credit crisis bringing the global economy to its knees. Hence it may be the time to explore some of the frontier markets. However frontier markets are not for the faint-hearted. So extreme caution is needed before jumping into any of these markets. Equities in frontier markets may be highly illiquid and information may not readily available to evaluate companies.

Some of the Frontier Market ETFs include:

Claymore/BNY Mellon Frontier Markets ETF (FRN)
Market Vectors Gulf States ETF (MES)
Market Vectors Africa ETF (AFK)
Market Vectors Vietnam ETF (VNM)
WisdomTree Middle East Dividend Fund (GULF)
SPDR S&P Emerging Middle East & Africa ETF (GAF)

From a BBC news report today:

“The president and his allies want to expand health coverage to include millions of uninsured Americans.

Republicans said his plans were not acceptable and called for a fresh start.

In his radio address, he said he remained “eager and willing to move forward with members of both parties”.

“It’s time for us to come together. It’s time for us to act.

“It’s time for those of us in Washington to live up to our responsibilities to the American people and future generations. So, let’s get this done.”

None of the proposals put forward by the administration or the Republicans addresses some  the key issues that should be the main points of any discussion of the U.S. healthcare system. Two of them are the soaring costs and the inefficiencies in the current system.

The chart below shows the comparison of some of the healthcare factors between the U.S. and a few other countries:

Source: WHO data via The Guardian

The  U.S. spends the highest on a per capita basis on healthcare and has only 26 doctors per 10,000. Germany spends a bit above half the US spending and still has more doctors, hospital beds and a higher life expectancy. There is a precipitous drop in per capita spending from the U.S. figure to the next highest spending country Canada. Japan also spends much lesser than the U.S. and yet the Japanese have a higher life expectancy, more midwives and hospital beds. Clearly the U.S. healthcare system needs a much complete and thorough analysis and redesign than the ones currently under discussion.

The 27 “Great Brands of Tomorrow” are:

1. Alibaba.com
2. Almarai
3. Amazon (AMZN)
4. Apple (APPL)
5. BIM
6. Capitec
7. China Merchants Bank
8. Commercial Aircraft Corporation of China
9. Enfamil (MJN)
10. Facebook
11. Hyundai Motor
12. Indian Hotels
13. Julius Baer
14. Li Ning
15. Mahindra & Mahindra
16. MercadoLibre
17. Mercedes-Benz
18. Polo Ralph Lauren
19. Sonova Holding
20. Swatch
21. Tiffany & Co (TIF)
22. Tingyi
23. Trader Joe’s
24. Tsingtao Brewery (OTC: TSGTY)
25. Under Armour (UA)
26. Uniqlo
27. Yakult Honsha

Some of the companies that own the brands listed above are expanding into regions where they did not have a big presence before. For example, DaimlerChrysler (DCX) the owner of the global luxury brand Mercedes-Benz is now focusing on emerging markets where the demand for luxury products is growing. Last month the company announced that the sales of its high-end Mercedes-Benz autos in China shot up by 77% in 2009 compared to 2008. Simiarly Mahindra & Mahindra of India is slowly expanding in the US market with its cheap but high quality tractors for the farming industry. Mahindra & Mahindra is coompeting against established American player Deere & Co (DE).

In this tab, we plan to add lists of stocks by sector so that it is easier for investors to access all stocks in a sector in one place. The stocks are listed in table format and are linked to Yahoo Finance. For example, all Railroad stocks are listed in one table for easier access. It must be noted that these lists include stocks from both the US and other countries traded in the US exchanges.

A sample of the stock lists already posted are as follows.

Stocks Trading on the New York Stock Exchange:

1. The Complete list of Electric Utility Stocks
2. The Complete list of Drug Stocks
3. The Complete list of Coal Stocks
4. The Complete list of Consumer Staple Stocks
5. The Complete list of Railroad Stocks
6. The Complete list of Food Stocks
7. The Complete list of Trucking Company Stocks
8. The Complete list of Water Utility Stocks
9. The Complete list of Air Courier stocks
10.  The Complete list of Airline stocks

Currently we have stock lists by sector. More types of lists will be added soon.

The five best performing Latin American ADRs YTD as of 2/26/10:

1. Banco De Chile (BCH)
Country: Chile
Sector: Banking
YTD Change: 15.01%

2. GRUMA (GMK)
Country: Mexico
Sector: Food Producers
YTD Change: 13.34%

3. Nortel Invesora (NTL)
Country: Argentina
Sector: Fixed Line Telecom
YTD Change: 13.13%

4. Vina Concha y Toro (VCO)
Country: Chile
Sector: Beverages
YTD Change: 12.44%

5. Ecopetrol (EC)
Country: Colombia
Sector: Integrated Oil & Gas
YTD Change: 10.92%

The five worst performing Latin American ADRs YTD as of 2/26/10::

1. Cemex (CX)
Country: Mexico
Sector: Construction & Materials
YTD Change: -19.12%

2. Fibria Celulose S.A. (FBR)
Country: Brazil
Sector: Forestry & Paper
YTD Change: -19.66%

3. Grupo TMM (TMM)
Country: Mexico
Sector: Industrial Transportation
YTD Change: -20.21%

4.  Brasil Telecom (BTM)
Country:Brazil
Sector: Fixed Line Telecom
YTD Change: -33.33%

5. Centrais Eletricas Brasileiras-Eletrobras (EBR)
Country: Brazil
Sector: Electricity
YTD Change: -38.36%

Banco De Chile (BCH) is the top performer with a return of 15% YTD. BCH is consistent high dividend payer and the current yield is 6.57%. The next dividend payment is $3.90 with a record date of March 19th and a pay date of April 6, 2010. Ecopetrol (EC) of Colombia has a dividend yield of 5.62%. For the full year 2009,  the company increased production of crude oil and natural gas by 17% from 2008 and sales volume rose by about 19% compared to 2008. Cement and construction materials maker Cemex(CX) announced disappointing quarterly results in January.

Click to Enlarge

Source: Credit Suisse Global Investment Yearbook 2010

Of the 24 countries listed above, Pakistan and Argentina are considered as Frontier Markets by index providers MSCI and S&P. FTSE views all the 24 countries as emerging markets. Israel was promoted to developed market in 2008 and South Korea in 2009.

On an annualized return basis, Hungary tops the list followed by Indonesia and Turkey. Among the BRIC countries, China was the lowest performer while India was the best performer over the last decade.

Why are merging markets important to an investor?

From the Credit Suisse Global Investment Yearbook 2010:

“Emerging and frontier markets are far too big to ignore. They account for more than 70% of the world’s population (over five times that of developed markets), 46% of its land mass (twice that of developed markets), and 31% of its GDP (almost half that of developed markets). And, taken as a group, their real GDP growth has been much faster than in developed markets.

These projections show the by now familiar consensus view that key emerging markets, especially the BRICs, will continue to grow rapidly, with China expected to displace the USA  as the world’s largest economy by around 2020, and with India overtaking the USA by 2050.

In Forbes’ 2009 ranking of the top global companies, three of the five constituents with the largest market capitalizations are from emerging markets. No fewer than 11 of the top 100, ranked by total market capitalization, are from China more than from any other country in the world apart from the USA.”

Click Credit Suisse Global Investment Yearbook 2010 to download the complete report in pdf.

The economic power is projected to shift from the US and Western Europe to the emerging countries in Asia and Latin America in the next decade and beyond. Goldman Sachs noted in a November report:

“Since 2001, we have focused on the increasing importance of BRICs countries in the
global economy; we believe they remain on a trajectory that will see their combined
output reach 50% of the G7 level by 2020 and parity between 2030 and 2050.” Emerging markets will see lots of action in the next few years and offer investment opportunities for global investors. Investing directly in emerging market equities requires access to those markets or one can invest via ADRs if they are available, ETFs or other vehicles.

Goldman Sachs has compiled a list of the ‘Nifty 50′ BRIC companies that are likely to become global winners in the next few years. Many of them are strong players in their respective industries. There companies were selected based on the following criteria:

• Returns on capital
• Industry positioning
• Management quality (with respect to environmental, social and governance issues)

The Nifty 50 BRIC companies are:

Petrobras(PBR), Vale(VALE), Gazprom(OTC: OGZPF)  were among the five companies with the largest market cap gains in this decade. With the global demand for natural resources rising, it is possible that they may continue the incredible growth into the next decade.

Foreign Direct Investment (FDI) fell sharply last year to $1 Trillion from $1.7 Trillion in 2008(Source: UNCTAD). However the overall trend of FDI flow is still up in the last decade since FDI into many of the emerging countries peaked in 2008.

OECD Economist Javier Santiso mentioned in The rise of “euro-emerging” multinationals:

“China drew a comfortable $90 billion from foreign companies investing in the country’s factories and other productive assets in 2009. In December 2009 alone, China attracted more than $12 billion in FDI, up 103% from a year earlier. Some emerging countries like Peru even enjoyed a rise of 28%. Most of the emerging countries however saw a reduction of FDI – but from a peak in 2008. In Brazil, for example, FDI fell by half in 2009 but from a historical record in 2008 of $45 billion. In Colombia, the fall has been less pronounced (-15% in 2009) but also from a peak in 2008. In India, according to the national estimates, FDI in the year to March 2010 would be about $18 billion, from a peak of $27 billion in the year 2008/2009.”

Some investors prefer to invest directly in emerging market companies. However this comes with high risk. For example, during the credit crisis in 2008 the markets in BRIC fell more than those in developed countries. Except Brazil, the other three countries fell more than 50%. Compared to this, markets in the UK, Canada, USA, Germany, etc. were all down less than 50%. In 2009, when the global markets rebounded the BRIC countries rose sharply then the developed markets. Despite this performance, some investors prefer to invest in emerging markets via developed market companies that have high exposure to those markets. This is a simple but effective strategy to profit from the growth of developing countries.

The number of people in the middle class category in BRIC countries is growing. An estimated two billion people could join the global middle class by 203o, mainly from India and China according to a Goldman Sachs report. In addition to the rising middle class and growing incomes, infrastructure demand is also expected to rise over the next decade. Hence companies that are well positioned to cater to the needs of the emerging markets will profit nicely.

Which companies from the Developed Countries have high exposure to BRICs?

Goldman Sachs has identified 50 companies (‘BRICs Nifty 50’) that have excellent potential to benefit from growth in the BRIC countries.

The BRIC ‘Nifty 50′ Developed Market companies are listed in the table below:

Source: Global Portfolio Strategy, The BRICs Nifty 50: The EM & DM winners
Goldman Sachs

Investors may also want to check out some of the multinationals mentioned in Javier Santiso’s article. The ‘Euro-emerging’ companies with large exposure to emerging markets are:

• Renault, Schneider Electric, Lafarge(LR) and Rhodia (RHA) of France
• MAN, Volkswagen (OTC: VLKAY) of Germany
• Philips (PHG) of The Netherlands
• Arcelor Mittal(MT) of Luxembourg
• Tullow Oil (OTC: TUWOY), Kazakhmys, Cairn Energy of the UK
• Telenor of Norway
• Banco Santander(STD), Inditex, Iberdrola (OTC: IBDRY), Endesa (ELE), Gas Natural, Telefonica(TEF) of Spain