Friday, August 13, 2010

Security Concerns A Roadblock To RIM's Future?


Research in Motion (NASDAQ:RIMM), which operates the popular Blackberry Messenger service, has been in the news recently for all the wrong reasons. Firstly the American President Barak Obama revealed that he was 'bored' of his blackberry handset with only a handful of people authorized to email the super-encrypted device and the company has ever since faced mounting pressure to open its secured data network for scrutiny by the governments of Saudi Arabia and the United Arab Emirates. RIM competes with Apple (NASDAQ:AAPL), Motorola (NYSE:MOT) and Nokia (NYSE:NOK) in the mobile phone market. Several other countries, including India, Algeria and Lebanon, have recently pushed for access to Blackberry data for law enforcement purposes.

If RIM denies their requests, its Blackberry Messenger service and/or smart phones could be banned from these countries. On the other hand, some Blackberry users might lose confidence in the service if they feel that their data is no longer confidential.



Why Business Users Prefer Blackberry

Despite the introduction of competing smart phone solutions, RIM's Blackberry remains prevalent amongst large business customers due to its track record of security and reliability. Heavy usage amongst business users helps RIM to 'condition' users to the Blackberry device making a switch less likely. RIMM's net profit margins of 16.5% are significantly higher than other mobile phone manufacturers of 5%, mainly because of RIMM's higher margin is its Service revenue segment but If numerous governments were to ban Blackberry Messenger services, RIM is likely to loose its USP which is its competitive advantage, prompting subscribers to buy other smart phones. Research in Motion (RIMM) has been getting brutally punished by Wall Street. Its stock is down 30% in the past 6 months from $75 to $56 per share.


RIM Market Trends:

Blackberry Mobile Phone Market Share increased from 0.4% in 2005 to 2.7% in 2009.

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Nickel: The Rise Of The Silver White Metal


Nickel has been one of the biggest sufferers in the global commodity price meltdown, but this high luster silver-white metal has been making a steady comeback fuelled by investment demand this year mainly driven by massive Chinese imports, and the stainless steel market recovery worldwide. As the global stainless steel production is slowly rebounded towards its highest levels and since stainless steel mills account for over two-thirds of nickel demand, its no surprise that Nickel prices have witnessed a spike in the recent times. As nickel’s chief application is as a constituent of a major building material, nickel use mirrors economic growth.

  • Nickel has jumped about 45% since the start of 2010, while copper and aluminum have risen merely 5%. And since its low point in late 2008, the commodity’s price has more than tripled to $27,500 a ton thanks to strong demand from the stainless steel industry along with supply disruptions.
  • Some 80% of nickel is use to produce steel products - with stainless steel being particularly important. Stainless steels are used in the building industry, automobiles, food & beverages and water industries
  • Nickel is taking off because there has been a huge rise in the demand for everything from home appliances to hybrid cars especially in rapidly emerging markets like China and India.
  • LME nickel stocks are currently sitting at around 116,034 MT, equivalent to around seven weeks of world consumption.
  • Nickel is a primary component in stainless steel and stainless steel is in all kinds of everyday things we use including home appliances and cell phones.

Nickel Global Demand:


Usage of nickel has increased over time and is correlated with economic development. In the past decade world nickel demand increased from 1.009 million MT in 1998 to 1.278 million MT in 2008, a growth rate of 2.4 % per year. However, the upward trend has had peaks and valleys. sia is now the largest regional market for nickel representing 54 % of total world demand. China alone now accounts for 25 % of world nickel demand compared with 4 % ten years earlier.


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A Market On Tires: Global Tire Industry Outlook


The automobile industry is one of the dominating sectors because many economic activities rely on and are linked to automobile production. If you include suppliers, car services, garages or retailers, a total of about 5 million employees depend on the success of the automobile industry. With changing technologies, production concepts, strategies and products, the automobile industry is often an initiator of innovations in other related industries as well.

As the world tries to come out of economic recession, the first sector to witness positive movement has been the Automobile sector and since its linked to related sectors like tire industry, plastics industry and metal processing, all the sub sectors are slowly witnessing a silent revival. As more and more people look at buying automobiles slowly, the tire industry is also set to attain a positive movement from the pits, where it has been for most of last year. The recession had people reducing spending across the board, which meant that they had been putting of those new tires on hold until things start to look a little better on the economic front. Now as the economy is moving out of the red slowly, tire sales are witnessing a welcome revival even better than the Automobile companies and a lot of second hand car owners have also been investing in the new set of tires instead of buying a new automobile altogether.

Tire shipments in 2010 are projected to increase by approximately 3 % or approximately 7 million units to 267 million units, according to the Rubber Manufacturers Association. Total shipments experienced an 8 % drop in 2009 to 259.7 million units. The increase in tire shipments reflects the onset of the economic rebound, an increase in vehicle miles traveled and a slight up tick in auto sales. As a result, this rebound is projected to extend into 2011, reaching approximately 275 million units as the economic recovery gathers momentum.


  • Tire companies were first in the early on 20th century, and grown in partnership together with the automobile business. In the present day, above 1 billion tyres are created annually, in over 400 tire factories, with the three top tire makers commanding a 60% total marketplace share.
  • The US tire manufacturing industry alone consists of about 100 companies with combined annual revenue of about $15 billion. The industry is highly concentrated and the top four companies generate more than 75 % of revenue. Major companies include Goodyear, Bridgestone, Michelin, and Cooper.
  • Tire manufacturing has become extremely technical and forward-thinking as manufacturers look to push the boundaries of what can be achieved through new technologies. Whether it’s improvements in fuel economy, handling performance or safety, technological developments in the tire world are making a big difference
  • As the world fights strong economic recession, people are more prone to buy and use older cars rather than buying new ones. No matter if the vehicle is old or new, the need for tire remains a constant and with number of second hand vehicle sales increasing and as compared to new vehicles, the worldwide consumption of tires is estimated to be more than automobiles.
  • With developing nations churning the growth engines of the world, commercial vehicles (vans, utility and light trucks) are much in demand in both developed and developing nations; such vehicles require both more and larger tires than passenger cars.

Correlation Of Tires And Rubber: In the history and the application of various materials, few have made as large an impact globally as natural and synthetic rubber. The source of the material stretches from plantations in Malaysia and Indonesia to factories on all continents. The making of rubber into tires and nontire goods involves a series of sophisticated manufacturing processes. The finished products are then distributed through thousands of warehouses and dealers in large cities and small villages, practically in every country.

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Enriching Investment Portfolios With Nuclear Green


The recent oil spill in the Gulf of Mexico has reopened the global debate on our continued dependence on fossil fuels as prime sources for world energy requirements. As witnessed from the horrific aftermath of the deepwater horizon oil spill, its clearly in the interest of human race to continue developing alternative, non-carbon-emitting fuels and technologies that can save the human as well as the animal race from grave dangers associated with our reliance on oil and coal. As the world searches for answers to the rising energy demands, nuclear energy as sustainable, economically feasible, environment friendly option is coming up as a favorite choice. Seeing the ever-increasing global energy demands, the only real alternate available option is nuclear energy, which makes a case for exploring investment options in Uranium. Because of its yellowish color, this naturally occurring metal ore is colloquially referred to as “yellowcake.” Uranium is also the key fuel for nuclear power plants. The uranium investment market is expected to be more regulated in coming years with the growth in the sector and more private participation. The power produced by uranium is seen as the only option for reducing world pollution while meeting the needs of a burgeoning world population. Uranium investing presents good prospects because more and more nuclear plants are being constructed to address a variety of energy needs.

  • Uranium in its enriched form is the fuel of nuclear power stations – 440 of them generate 16% of the world’s electricity.
  • One kilogram of uranium-235 can theoretically produce about as much electricity as 1500 tons of coal.
  • According to the World Nuclear Association (WNA), Uranium which is crucial for the generation of nuclear power, was used in 436 nuclear reactors in 32 countries around the world as of Feb. 1, 2010.
  • Massive oil finds is a thing of the past and people need alternative energy sources, with the benefit that even environmentalists are starting to acknowledge that nuclear may be viable part of a greener future.
  • Other energy resources suffer from disadvantages that make atomic power an increasingly attractive alternative. Oil is getting too expensive and scarce while Coal is too dirty producing nearly 10% of the world’s greenhouse gases and and most alternate energy sources are not yet commercially viable.
  • World leaders have pledged to more than double the current nuclear energy output within the next 20 years.

Uranium Investment Options

Uranium over the years has emerged as an excellent investment option. The price of uranium shot up from about $10 per pound in 2003 to more than $130/lb in 2007, according to the Financial Times. Canada, Australia and Kazakhstan represent 71% of global mine supply of uranium. The uranium market was relatively closed for investors till 2007, when the New York Mercantile Exchange launched uranium future contracts for private investors. Australian and Canadian uranium stocks are the most preferred stocks and among the most favored investment opportunity in uranium. Most of the uranium mining companies are listed on the Canadian and the Australian stock exchanges.

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Monday, August 9, 2010

Investing Options In Indonesia: Asia's Best Peforming Index

Asia is home to several emerging and globalizing powers, including India and China but one nation that stands out but is not largely covered in the business media is Indonesia. Little is known about Indonesia in the investing circles despite being a country made up of some 17,000 islands, which is now the 4th most populous nation in the world. One striking feature that highlights Indonesia's growth in recent years is the fact that the country has managed to avoid recession during the global downturn, unlike some of its more export-reliant neighbors. Over the last decade, Indonesia has emerged as a vibrant and plural democracy. Its economy is buoyant and a new sense of confidence is evident both within its political leadership as well as its growing civil society. Indonesia is the largest Muslim country in the world, but the Islam practiced by the vast majority of its people is liberal, tolerant and accommodative.

  • The International Monetary Fund (IMF) projects Indonesia’s economy will expand 6% this year. The Chairman of Indonesia’s Investment Coordinating Board estimates growth of between 6% to 7%.

  • The nation’s shares have climbed 12 percent this year and are Asia’s best performers barring Mongolia and Bangladesh, as foreign funds increased purchases after the central bank raised its growth forecast and Standard & Poor’s upgraded the nation’s sovereign debt ratings.

  • Foreign investors moved more funds to Indonesian stocks in March, buying a net 4.92 trillion rupiah ($543 million) of shares after selling 1.58 trillion rupiah in the first two months this year, according to data from the Jakarta stock exchange.

  • The Indonesian rupiah has risen 3.6 percent this year, the second-best-performing currency in Asia, according to data compiled by Bloomberg. A strong rupiah and low inflation have helped the central bank keep its key interest rate at a record low of 6.5 percent to support Southeast Asia’s biggest economy.



  • Indonesia's stock market index, the Jakarta Composite Index, broke its record high earlier this week as it reached 3013.40 points bringing its total gains this year to 19 %, the most among Asia’s 10 largest markets.



Indonesia has managed to avoid recession during the global downturn, unlike some of its more export-reliant neighbors. Both Singapore and Hong Kong are in recession and Malaysia and Thailand are likely slipping into a recession, too, analysts say.


ETFs Investing In Indonesia:


1: The Market Vectors Indonesia (IDX) Fund: The Index provides exposure to publicly traded companies that are domiciled and primarily listed in Indonesia, or that generate at least 50% of their revenues in Indonesia. The fund has more than doubled since its launch, outpacing the S&P 500 and outperforming BRIC countries. IDX consists of the 28 securities included in the Market Vectors Indonesia Index, a benchmark that tracks the performance of companies that are based in or generate at least half of their revenues from Indonesia. IDX charges an expense ratio of 0.71%. The IDX is much more focused on Energy and Commodities that are rallying globally as the US Dollar falls and inflation signals begin to sound.


IDX Top Ten Holdings

1. PT Astra International TBK: 8.80%
2. PT Bank Central Asia TBK: 6.80%
3. P.T. Telekomunikasi Indonesia Tbk. ADR (TLK): 6.75%
4. PT Bank Rakyat Indonesia TBK: 6.06%
5. PT Perusahaan Gas Negara (Persero) TBK: 5.72%
6. PT Bumi Resources TBK: 5.57%
7. PT Bank Mandiri (Persero) TBK: 5.57%
8. Adaro Energy Tbk: 4.82%
9. PT Indocement Tunggal Prakarsa TBK: 4.72%
10. PT United Tractors TBK: 4.66%

% Assets In Top 10: 59.46%
Total Holdings: 29
Issuer: Van Eck
Expense Ratio: 0.68%

IDX Sector Breakdown
Sector Percentage
Financials 25.23%
Industrial Materials 20.03%
Consumer Goods 14.71%
Energy 13.72%
Consumer Services 8.80%
Telecom 8.79%
Utilities 5.72%
Health Care 1.79%

2: The other fund for investing in Indonesia is a closed-end fund, Aberdeen Indonesia Fund (IF), who's principal investment objective is capital appreciation through investing primarily in equity and debt securities of Indonesian companies. Its secondary objective is current income, which is to be derived primarily from dividends and interest on Indonesian securities.

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Tracing Investment Opportunities In Egypt

When we speak of Egypt, the first thing that comes to mind is the images of the Great Pyramid at Giza, the Nile Delta and the ancient Egyptian civilization. Far from being a civilization located on both sides of the river Nile, the modern day Egypt is the most populated country in the Middle East and the third most populous on the African continent. Despite technically considered part of geo-economic area called Middle East Egypt lies in the continent of Africa and its per capita GDP is below the global average, trailing behind other emerging markets such as Brazil, South Africa, China, but ahead of India. Egypt’s economy is much more diversified than many in the region. Oil and gas make up only about 15% of the country’s GDP, compared to as much as 50% for many oil rich states. In addition to a strong financial sector, tourism, agriculture and industrials account for significant portions of GDP.

Investors wanting to invest in the growing Egyptian economy can do so via the Van Eck Global launched the Market Vectors Egypt Index ETF which is the first US traded Egypt ETF. The fund launched on 18th February 2010, invests in 28 companies that derive at least 50 percent of their revenues from Egyptian operations. The fund comes with a price tag of 0.94 percent. EGPT is the latest off-the-beaten-path country ETF from the fast-growing Van Eck, which recently launched ETFs tied to Poland, Indonesia and Vietnam as well. EGPT follows the Market Vectors Egypt Index, providing exposure to publicly traded companies that are domiciled and primarily listed on an exchange in Egypt or that generate at least 50% of their revenues in Egypt. The Egypt ETF has a heavy weight in the financials (42%) and industrial materials (31%) sectors, a common occurrence among large cap-focused emerging markets ETFs


EGPT: Sector Breakdown

Financials 42%
Telecommunications 17%
Industrials 16%
Materials 14%
Energy 4%
Consumer Discretionary 3%
Consumer Staples 2%


EGPT: Top Ten Holdings

Commercial International Bank 8.48%
Orascom Construction 8.44%
Orascom Telecom Holding 6.81%
EFG-Hermes Holding 6.60%
Mobinil-Egyptian Mobile Serv 5.88%
Egyptian Kuwaiti Holding 5.77%
TMG Holding 5.39%
Elswedy Cables Holding 5.13%
Al Ezz Steel Rebars 5.02%
Telecom Egypt 4.59%



Egyptian Stock Market

The EGX 30 is the main index of the Egyptian exchange. The EGX 30 is comprised of the 30 largest stocks traded on the exchange, and is quoted in U.S. dollars. A total of 179 stocks were listed on the Egyptian exchange in early 2010 and another 27 were trading over-the-counter. Regarding market capitalization, Egypt is the second biggest African market after South Africa. Many stocks are very liquid and can be traded easily and with low transaction cost. Foreign participation is still quite low, as it is in most other African markets.

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Investing In Turkish Economic Delight

For a number of years, Istanbul has been given the cold shoulder with respect to it joining the elite European Union club and there were feelers that Turkey was believed to be too economically backward to qualify for membership. A visit to Turkey today can clearly suggest that the old argument no longer holds good as modern day Turkey is a fast-rising economic power, with a core of internationally competitive companies turning the youthful nation into an entrepreneurial hub, tapping cash-rich export markets in Russia and the Middle East while attracting billions of investment dollars in return. So complete has been Turkey's transformation that about 10 years ago, Turkey which had a budget deficit of 16% of gross domestic product and inflation of 72% is now fulfilling European Union’s fiscal guidelines of a 60% ceiling on government debt, at 49% of GDP, and could well get its annual budget deficit below the 3% benchmark next year.

The Republic of Turkey borders the Mediterranean Sea and its strategic location between Europe and the Middle East brings potential economic benefits. Turkey has a unique economy and a potentially attractive risk and return profile. Turkey, situated at the crossroads where two continents meet, is an ideal center for investors looking for a location at the heart of Euro-Asia. With its dynamic and growing economy, huge market, competitive and skilled labor force, Turkey offers numerous opportunities to international investors.

  • With a population of 73 million with an average age of just 27.7 years, Turkey has a very young population and an increasing consumer purchasing power; Turkey offers a huge and dynamic domestic market to investors. Moreover Turkey's economy has witnessed a growth of an average of nearly 6% between 2002 and 2008.
  • Unlike other emerging markets in Europe, Turkey survived the financial downturn without relying on an emergency bailout package from external lenders. The country now is expected to grow 3.5% to 4% this year.
  • Turkey is located at the gateway of the Middle East, Caspian petroleum and Central Asian natural gas to the west, which are regarded as the future energy reserves of the world.
  • In an encouraging sign, Standard & Poor's raised its long-term foreign currency and local currency sovereign credit ratings to BB and BB+, respectively in February this year.
  • IMF projections for the period 2008-2013 suggest that Turkey would maintain the title of the world’s 17th largest economy until 2013 with gross domestic product reaching $968.2 billion in 2013
  • The Istanbul Stock Exchange’s ISE-100 Index; hit all-time in-session record high at 60,410.11 points earlier this week. The record-breaking performance was attributed to the positive atmosphere in the global markets, positive expectations on European bank stress tests, the possibility of an increase in Turkey’s sovereign credit rating and most of all, foreign investor interest in the bourse.
ETFs Investing In Turkey


1: iShares MSCI Turkey Investable Market Index Fund (TUR) : One of the best ways for U.S. investors to make a play on Turkey is through the iShares MSCI Turkey Investable Market Index Fund (TUR). The fund tracks the MSCI Turkey Investable Market Index, which measures the performance of the Turkish equity market. TUR is heavily focused on financials, which make up 52% of total assets. Additionally, the fund makes large allocations towards the industrial materials (13.6%) and telecommunication (10.4%) sectors.
TUR Top Ten Holdings
1. Turkiye Garanti Bankasi (GARAN): 14.50%
2. Akbank T.A.S. (AKBNK): 9.53%
3. Turkiye Is Bankasi C Share (ISCTR): 8.09%
4. Turkcell Iletisim Hizmetleri AS (TCELL): 6.60%
5. Haci Omer Sabanci Holding A.S. (SAHOL): 4.07%
6. Anadolu Efes Brewery ve Malt Sanayi A.S. (AEFES): 3.91%
7. Yapi Ve Kredi Bankasi (YKBNK): 3.90%
8. Turkiye Halk Bankasi A.S. (HALKB): 3.83%
9. Bim Birlesik Magazalar A.S. (BIMAS): 3.81%
10. Tupras-Turkiye Petrol Rafineleri A.S. (TUPRS): 3.77%

TUR Sector Breakdown
Financials 53.15%
Industrial Materials 13.63%
Telecom 9.47%
Consumer Goods 7.13%
Consumer Services 4.58%
Energy 3.99%
Business Services 3.14%
Media 1.25%
Utilities 1.22%
Hardware 1.02%
Health Care 0.62%

Expense Ratio: 0.63%

TUR Performance
52 Week Return: 43.28%
YTD Return: 13.62%
1 Week Return: 4.61%
2 Week Return: 7.29%
4 Week Return: 10.64%
13 Week Return: -1.95%
26 Week Return: 8.43%
2: SPDR S&P Emerging Europe ETF (GUR): The S&P European Emerging BMI Capped Index is a market capitalization weighted index that defines and measures the investable universe of publicly traded companies domiciled in emerging European markets. The fund has 16.49% holdings in Turkey.


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The Colombian Growth Story: From Rampant Violence To Investments

As allegedly reported by the media and with a common perception of being a nation of rich in drug peddling, abductions and murders, the Republic of Colombia has undergone a remarkable transformation over the past decade. Colombia has been fighting to prove that it is a safe and worthwhile investment destination and has now put itself firmly back onto the investment map. Transforming itself from the Drug capital of the world to a nation attracting strong foreign investment in recent years, Colombia's strong fundamentals stand out. Not only has Colombia been recognized as one of the best pro-business reformers globally in recent years by the World Bank, the country's $130 billion economy, a world leader in the production of coffee, petroleum, textiles, and flowers, is growing at 6.8% a year, two full points faster than the Latin American average. Colombian economy has experienced tremendous growth, benefiting from a commodity boom and sound policies that stimulated growth. The Colombian economy is arguably the largest in Latin America after Brazil, Mexico and the forever in transit economy of Argentina, with one of the largest deposits of oil and natural gas deposits in Latin America.

The lush green tropical jungle country of Colombia has one of the largest deposits of green gem emerald mostly exported to jewelry producing nations. Named after Christopher Columbus by the South American liberator Simon Bolivar, the modern day Colombia continues to be a dark spot on their investment horizon or some investors. Even though, the country's notorious past acts as a speed breaker preventing foreigners from investing in this Latin American nation, the fact is that every indicator of violence in Colombia including homicides, kidnappings, and acts of terrorism have declined significantly over the past eight years.

• Terrorist acts are down 84% from 2002.
• Homicides have dropped 45 percent from 2002 through 2009 – the lowest homicide rate in 22 years.
• Kidnappings have dropped significantly, down 88% from 2002, also now at the lowest rate in 22 years.
• Today Colombia has a lower violent crime rate than many major U.S. cities.

Far from being a dangerous place to even visit, leave alone considering any thoughts of investment, Colombia is slowly but surely transforming itself into a Latin American success story with its free-market approach to its economy.

  • According to Bloomberg data, Colombia is forecast to attract about $10 billion in foreign direct investment this year, up from about $7.5 billion last year.
  • Colombia's stock market has increased 14-fold since 2001 with a still modest total capitalization of $59 billion.
  • Colombia is seen as a trustworthy ally by the United States amid its deteriorating ties with Venezuela and Ecuador. The U.S. has sent $5 billion in aid to Colombia since the year 2000 making it the 4th largest financial aid recipient of the U.S.
  • In the past 10 years, Colombia has slashed its inflation rate from 18% to 5%, and since President Alvaro Uribe was elected in 2002, unemployment has dipped from 16% to 13%.
  • Not only has Columbia been the best performing stock market this year, posting a double digit gain as opposed to all major markets that are down for the year, Colombia has blown away all challengers over the last decade posting an 34.5% annualized return.
  • Colombia has abundant natural resources, including gold, silver, copper, coal, oil, gas, and more, a good deal of which remains under explored. Global gold mining companies are likely to invest as much as 4.5 billion U.S. dollars over the next ten years in Colombia attracted by rich unexplored regions and soaring prices of the commodity.


The Colombian Stock Exchange: The Colombian stock exchange or the Bolsa de Valores de Colombia, also known as Bolsa de Valores (BVC), is the principal stock exchange of Colombia. It was created on July 3, 2001 by the union of three extant stock exchanges in Colombia: Bogota Stock Exchange (Bolsa de Bogota), Medellín Stock Exchange (Bolsa de Medellin)and Cali's Western Stock Exchange (Bolsa de Occidente). The company maintains offices in Bogotá, Medellín and Cali.


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Investing In Mexico: The Vibrant Latin American Economy


For years the most prominent feature of Mexico has been its exotic cuisine with all its varied flavors, colorful decoration, and variety of spices while investment options were never taken seriously. Investors for long have viewed other Latin American economies like Brazil and Argentina with more interest discussing plans possibly sitting in a restaurant serving Mexican cuisine. While Mexico doesn't quite enjoy the celebrity status of rival Brazil, there is no denying the fact that the country is undergoing something of an economic renaissance. With its last financial crisis more than 10 years behind it, Mexico is enjoying record foreign currency reserves and an investment-grade debt rating, thanks to much-improved fiscal discipline. It even boasts several companies listed on the New York Stock Exchange or NASDAQ and dozens of others that trade over the counter. Money managers are especially keen on stocks in the residential construction business as more and more Mexicans qualify for loans to build their own homes.

  • The Mexican economy rebounded in the first quarter of this year, expanding more than 4 % from a year earlier after contracting 2.3 % in the last three months of 2009.
  • Mexico’s international reserves reached a record $95.7 billion in March. The oil and manufacturing sectors are showing strong improvements and Mexican exports increased by 39% in March relative to March 2009.
  • The automotive industry, one of the most important industries in the country, is recovering strongly with production and exports up in the first four months of this year. The unemployment rate in the first quarter stood at 5.3%.
  • Rich in farmland, silver and copper, Mexico is the world’s 11th largest economy and is known for being a free trade economy that is heavily geared towards exports. Mexico’s trade is based on free trade agreements with more than 40 countries, including Japan, Israel, EU and various Central and South American countries.
  • Mexico provides security and legal protection for foreign investors through Bilateral Investment Treaties (BIT’s) negotiated with 24 countries and a skilled and competitive labor force.

Mexico’s peso has been a major gainer against the dollar in recent weeks as an economic recovery in the U.S. fuels demand for the Latin American nation’s exports. Mexico’s economy is looking at a 5% growth rate as it recovers from the recession this year. The official forecast is set at 4.1%. With as many as six Mexican companies looking to go public this year, a rise in the Mexican IPO activity might just be the catalyst for speeding up the country's economic growth. There are a number of ways to include Mexico in your investment portfolio. Here is a list of some the best performing Mexican ETFs.


Top 7 ETFs To Invest In Mexico

MSCI Mexico Index Fund (EWW): The index measures the performance of the Mexican equity market.

EWW Top Ten Holdings

1. America Movil S.A.B. de C.V. (AMXL): 23.66%
2. Wal-Mart De Mexico SAB de CV (WALMEXV): 9.09%
3. CEMEX SAB de CV (CEMEXCPO): 6.62%
4. Grupo Mexico, S.A.B De C.V (GMEXICOB): 4.94%
5. Grupo Televisa SA (TLEVISACPO): 4.67%
6. Fomento Económico Mexicano, S.A.B. De C.V. (FEMSAUBD): 4.67%
7. Telmex Internacional S.A.B. de C.V. (TELINTL): 3.74%
8. Grupo Financiero Banorte, S.A.B De C.V. (GFNORTEO): 3.61%
9. Telefonos de Mexico,S.A.B. de C.V. (TELMEXL): 3.34%
10. Carso Global Telecom (TELECOMA1): 3.12%

Expense Ratio: 0.52%

EWW Sector Breakdown

Telecom 34.88%
Industrial Materials 21.21%
Consumer Goods 13.59%
Financials 11.48%
Consumer Services 10.25%
Media 5.09%
Business Services 2.82%
Health Care 0.39%

Mexico Fund Inc. (MXF): The Mexico Fund, Inc. (the Fund) is a closed-end, non-diversified management investment company. The Fund's investment objective is to seek long-term capital appreciation through investment in securities, primarily equity, listed on the Mexican Stock Exchange. The Fund may invest in Mexican fixed-income securities and bank time deposits of Mexican banks.

Top 10 Holdings

America Movil, S.A.B. de C.V. 19.23%
Wal-Mart De Mexico SAB de CV 10.46%
Grupo Mexico SA De CV Gmexico 7.54%
Grupo Televisa SA 4.99%
Fomento Económico Mexicano, S.A.B. De C.V. 4.21%
Kimberly Clark de Mexico SA de CV 4.04%
GPO BIMBO SAB 3.75%
Cemex S.A. 3.74%
Mexichem, S.A.B De C.V 3.74%
Grupo Financiero Banorte, S.A.B De C.V. 3.33%


Total Expense Ratio: 1.72

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Mexico Investment Guide: Mexican Stocks And ADRs

Mexico was in the international headlines for all the wrong reasons last year after the deadly outbreak of the H1N1 flu virus that sparked a global pandemic closing schools and businesses for two weeks in the country. The outbreak not only resulted in a big drop in tourism revenue of Mexico but also came as a major blow to the Mexican economy that had been already gripped by the effects of the global financial crisis. Mexico's capital market activity has hence slowly picked up from the lows of 2009 and is slowly but surely moving towards an economic resurgence. Testimony to the fact is that the Mexican economy has rebounded in the first quarter of this year, expanding more than 4 % from a year earlier after contracting 2.3 % in the last three months of 2009. With as many as six Mexican companies looking to go public this year, a rise in the Mexican IPO activity might just be the catalyst for speeding up the country's economic growth. Private-sector economists believe that Mexico is likely to grow at 4.2 % this year resulting in a strong rally in the BMV’s benchmark IPC index, which hit an all-time high of 34,134 points on April 15. During the past 12 months, the index has gained almost 50 % in value.

Before discussing the possibilities of investing in Mexico or including Mexican stocks in your investment portfolio, its important to understand the new dynamic changes at the Bolsa Mexicana de Valores or the Mexican Stock Exchange after it successfully offered its shares to the public and became a listed company on 13 June 2008. More than 13,600 individual investors bought shares in the IPO, making BMV a widely held public company. BMV (the company) trades on the Mexican Stock Exchange under the ticker code BOLSAA for it’s A shares. BMV is an actively traded stock, and from 1 February 2009 its A shares were included in the BMV's own IPC index of the top 35 Mexican stocks for the first time.


Overview Of The Mexico Stock Exchange:

The Bolsa Mexicana de Valores, also referred to as BMV or the Mexican Stock Exchange, is the chief stock exchange in Mexico. Located in Mexico City at Paseo de la Reforma, BMV is a private limited company. Shareholders of Mexico's stock exchange are all brokerage firms. BMV trades in debt instruments such as CETES (Federal Treasury Certificates); investment unit bonds, BONDES (federal government development bonds); Bankers acceptances, development bank bonds, warrants, debentures, stocks, mutual fund shares and so forth. The BMV-SENTRA Equities System allows for trading to take place electronically.

The Mexican Stock Exchange deals with 13 indices of stock prices. The IPC or Índice de Precios y Cotizaciones is the benchmark stock index and is the widest indicator of the stock market's complete performance. A number of companies are listed with the Bolsa Mexicana de Volores. Amongst the top companies on Mexico's Stock Exchange are Cemex (cement maker); América Móvil (wireless communications); Telmex (telecommunications); Televisa (media) and Grupo Corvi (consumer products distribution).

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Need for a new hot ETF : Global Rice Market Mechanism Outlook


As more and more investors try and bring the commodity markets segment into their investment portfolios, most of them wonder why rice, which is one of the world's largest crops still lacks an investment vehicle. For all major commodities, there are futures markets and corresponding ETFs, but rice continues to be the only major commodity player that has no ETF mechanism in any stock exchanges in the world.

Like Lumber, which has very little liquidity or volume but is still considered to be a key future and ETF, rice is also a key future commodity because it is essentially an index of world consumption patterns, as rice is the most essential food for half of the world's population today. Since rice producers are not publicly traded companies one cannot purchase their stock directly, so an ETF for rice based on futures would be a good investment vehicle. A high number of rice market analysts also believe it is the right time to offer a rice oriented exchange traded fund which would not only attract many investors but would also provide grain traders with more risk control measures.

Time For Rice ETF: Oryza.com, the premier rice web portal which periodically publishes projections on rough rice trends and rice trade trends has also underlined the need for a Rough Rice ETF that can help US investors to enter the futures market with ease. Quoting from Oryza.com, the portal says

"Rice Exports are important to the U.S. rice industry, as the global market accounts for about half of its annual sales volume. U.S. rice imports have been increasing in the last 25 years, from about 4 percent of the domestic market in the second-half of the 1980s to more than 15 percent by 2008/09 (August-July). Unless you dabble in the futures market, there’s no real pure rice play for American investors. When rice hit record prices last year, investors wondered why there was no rice-based exchange-traded fund (ETF). More than a year later, they are still wondering why one of the world’s largest crops still lacks an investment vehicle of its own. US Rice futures traded at the Chicago Board of Trade, CBOT, continues to be the barometer for rough rice orientation worldwide, still there is no rice centric Exchange Traded Fund that can help investors to profit from the global rice situation. For investors trading in the commodity markets, all except rice futures have some ETFs or sub indexes to track but nothing for rice. Its time that rice, which is the world's second largest staple crop has its own ETF based on Rough Rice futures. Considering the vital importance of the most consumed cereal in the world, a RICE ETF could be very welcome and would play a role in creating a standard in global rice pricing."


Factors Affecting Rice Price Fluctuations:

Weather: Weather is an important factor for all agricultural commodities. To produce a high-yielding rice crop, growers require high heat, plentiful water and smooth land that facilitates flooding and drainage. Over the past few months, we’ve seen extraordinary weather events around the world with Thailand and Vietnam facing prolonged drought while China faced flash floods triggered by heavy rainfall even as neighboring India's monsoon rainfall has been below normal. South East Asia is estimated to have affected 61.3 million residents and 5 million hectares of crops. Rice has recorded relatively moderate gains of about 10 percent since this began. This pressure on supply is likely to further increase the price.

Government Control: Rice in modern times has also become a very politically sensitive crop. Unpredictable government intervention continues to add volatility to the thinly traded global rice market. The Chinese government watches food prices and supplies on a daily basis while India, one of the largest rice manufacturing nations, has continued its year long ban on all non Basmati rice exports in order to fight domestic inflation rates.

Evolution of the world production and human food utilization of the Paddy rice from 1961 to 2002 (million tons)

Evolution of the world production and human food utilization of the Paddy rice from 1961 to 2002 (million tons)


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Can Nonfarm Payroll Futures Predict the Future of the Market?

While the vital Nonfarm payroll statistics and numbers are considered key economic data, one can also trade in nonfarm payroll futures and future options for speculation or risk management, which as per the Chicago Mercantile Exchange is a "transparent, straightforward and direct exposure to the government labor number." NFP futures and options are an accessible way to gain direct exposure to the government labor number or to offset unexpected financial market moves that often occur when this number is released. But can nonfarm payroll data based futures and options foretell the future of broader markets?

$25 for each 1000 jobs added or lost?

Nonfarm Payroll (NFP) futures and options on futures, offered by the CME are designed to coincide with the release of the NFP economic data each month (typically the first Friday of the month). These plain vanilla contracts are based on the monthly U.S. Bureau of Labor Statistics report that measures employment health. As it is the first major economic release each month that speaks to the condition of the prior month, the NFP is closely followed as a way to gauge how the Federal Open Markets Committee perceives economic growth.

Can Nonfarm Payroll Futures predict the Future of market?

Here are a few charts that can possibly foretell what can be expected.
This is the weekly chart covering March 2009 to July 2010

click to enlarge
Weekly chart of Nonfarm Payroll Futures

This monthly chart is very clear and mirrors the market oscillations of 2009 mostly upward till May 2010. But from June 2010 the sharp decline is telling and it appears to go more negative.


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An Insight To Cheese As Commodity, Food, Stocks And Futures


It may sound CHEESY but it is really cheesy that cheese being such a widely consumed commodity was not traded on Chicago board compared to Europe where cheese is a key dairy commodity while the US cheese industry is largely focused on 3,4 states alone. May be its got something to do with the fact that some European cheeses are so cheesy and smelly that most common American and Asian consumers would run away never looking behind because of its awful smell. Yet, good and fresh cheese is always consumed more and more also because meat consumption is reducing exponentially across the globe with more people adopting vegetarian diets.

Cheese, a highly nutritious and palatable food, is of significant value in the diet because it contains almost all of the protein and essential minerals, vitamins, and other nutrients of milk. According to ancient records passed down through the centuries, the making of cheese dates back more than 4,000 years. No one really knows who made the first cheese. According to an ancient legend, it was made accidentally by an Arabian merchant who put his supply of milk into a pouch made from a sheep's stomach, as he set out on a day's journey across the desert. The rennet in the lining of the pouch, combined with the heat of the sun, caused the milk to separate into curd and whey. That night he found that the whey satisfied his thirst, and the cheese (curd) had a delightful flavor which satisfied his hunger. Travelers from Asia are believed to have brought the art of cheesemaking to Europe. In fact, cheese was made in many parts of the Roman Empire when it was at its height. To know more about the types of popular cheese consumed worldwide, please check the bottom of the article.


US Cheese Industry: As cheese demand continued to grow and spread rapidly, manufactured and processed cheese production increased dramatically. Total natural cheese production grew from 418 million pounds in 1920 to 2.2 billion pounds by 1970. Rising demand for cheese throughout the 1970s and 1980s brought total natural cheese production to more than 6 billion pounds by the beginning of the 1990s. Processed cheese also experienced a surge in consumer demand with annual production exceeding 2 billion pounds a year by the beginning of the 1990s. Currently, more than one-third of all milk produced each year in the U.S. is used to manufacture cheese. Recent increases in the overall demand for farm milk have in large part been due to the continued growth of the cheese industry. As consumer appetites for all types of cheese continue to expand, so will the industry. From humble beginnings, the U.S. has become the largest cheese-producing country in the world. As global appetites for cheese grow, the U.S. is well prepared to supply the increased demand.

The Inception Of Cheese Futures

After successfully trading milk and dairy futures and options, the Chicago Mercantile Exchange, CME, the world’s leading derivatives marketplace, launched cheese futures and options on futures on June 21. For the first time, cash-settled contracts are now available on CME Globex, the exchange’s electronic trading platform. According to CME, the cheese contracts were requested by customers (manufacturers and processors of cheese) in an attempt to hedge their risk profiles. When this launch was announced, the CME noted that many of its customers were already involved in Class III milk and dry whey futures and options markets and hoped that this new contract would allow these customers, in theory, to lock in prices.

The Cheese contracts are listed monthly with each contract representing the equivalent of 20,000 pounds of cheese and the tick size of $0.001 per pound. Trading hours are Sunday through Thursday, 5:00 p.m. to 4:00 p.m. Central Daylight Time, and Friday until 1:55 p.m., with daily trading halts from 4:00 p.m. to 5:00 p.m.


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About World Market Pulse

An unbiased review of world markets. Review of current market scene, news, events and forecasting for the days to come.
Our focus is on prominent emerging markets, major world markets and national financial centers of big industrialized nations.

There are many markets that have their own personality and they do not necessarily follow the United States Financial markets. We can post news, views and analysis and forecasts for specific market areas to enhance value for your portfolios. If you are based outside the country of interest, you could participate in the world markets by investing in Exchange traded funds about we would be discussing and providing ample information.