Sunday, 23 September 2012

Weekly Update – Sept. 24, 2012

Apple hits $700 a share on NASDAQ!!

Much anticipated Apple’s new version of iPhone – iPhone 5- was finally introduced to the world on Sept 12, 2012. Since then, Apple (AAPL) has climbed 4 percent to $700.10 at the close in New York. The stock has gained 73 percent this year according to Bloomberg.

Considering the fact that iPhone 5 came out only 11 months after iPhone 4S, some analysts said it is still too early and the early release is attributed to the victory over the federal trial against Samsung, which wishfully boosts its sales and expends its global market shares.

The estimated demand for the new iPhone 5 just for the first week of sales was revised to 10 million from 6 million, which makes the iPhone 5 the largest consumer-electronics debut in history!!

So…will Apple stock hit $1,000?? Well, one thing for sure… Apple is still capable of awing the world!!

Investment TIP:

If you wish to look into ETFs generating some decent returns due to the success of iPhone 5 sales, follow these two ETFs.

-      Global X Lithium ETF (LIT): focuses on Lithium, the main ingredient to the production of handset battery, and exclusively benefits when high-tech gadgets come out

-      iShares MSCI Taiwan Index Fund (EWT): has 8% weighing in Hon Hai which is the parent company of Foxconn that makes iPhones in Taiwan      

also focuses on semiconductor companies that may likely have some business based on iPhone’s success

The second largest automaker in South Korea, “Kia Motors”, presents the brand-new model of K3!!

Finally!! Kia pulled off the completion of K-series lineup with the domestic sales launch of its revamped K3 sedan!!

The 1.6-liter gasoline, six-speed automatic K3 will cost around 14.92 million won (USD $13,350). On the WSJ interview with Kia vice Chairman Hank Lee, he said that Kia is on the track to meet the targeted global sales of 2.71 million units this year, up from 9.5% from last year and a substantial increase from the 1.11 million back in 2006.

Kia stock has been on the substantially positive slope due to the Kia’s endeavor to take turnaround by hiring former Audi designer Peter Schreyer in 2006 to lead its styling team.

Furthermore, Kia’s global market share has increased to 4.2% from 1.8% since the first K-series, K5 sedan, debut in 2010 was a huge success domestically as well as globally.

However, the substantial growth would have been much greater if there were less series of strike action. Kia workers have undertaken 33 strikes since 2011 resulting in a loss of potential production estimated at 63,000 vehicles valued at 1.035 trillion won.


Seize the investment opportunities in Russia now!!

Well, it is not actually what happened precisely during the week but I believe this is something really significant that we all need to be aware of. After 19 years of negotiation, Russia was finally accepted to the World Trade Organization on Aug. 23rd, 2012. Despite the global financial turmoil, Russia, the world’s sixth largest and third fastest growing major economy, has opened up for trade.

Well, is it good to invest in the nation? Let’s have a look at its economy and industries. First off, the debt GDP ratio in Russia is 9%. Put this in the perspective that the U.S. is 100%, so Russia is almost 10 times less in debt than the states. Russia has the population of 143 million people which is equivalent to that of the U.K., Germany and the Netherlands combined!! Furthermore, Russia was the third fastest growing economy with 4.3 percent GDP growth in 2011, which means that only China and India grew faster. Furthermore, its economy growth was driven mainly by manufacturing – the fourth fastest growing nation with it – and agriculture. Most importantly, it is speculated that Russia will benefit mostly from the exports by the extractive natural resources – oil, gas, coal, mineral, ores and lumber as the world consumes more of scarce resources.

Because of the standardized rules of WTO, Russia eventually will have to bring down its high tariffs to some degree that the rest of the world can fairly compete with the domestic companies. So, the most anticipated industry that would benefit in that matter is the engineering – Spacecraft, aeroplanes, ships, automobiles, trains, trams and trolleybuses. Therefore, a lot of foreign manufacturers with concentration on these segments would look forward to the new investment opportunities.

In addition to the manufacturing, service industries such as banking, telecommunications, electricity generation and distribution would generate tremendous yet risky investments for the foreigners who now can have the complete ownership in these industries. This statement is also backed by the IMF’s report stating that Russia’s service industries are very inefficient by international standards and Russia is well-prepared to welcome the foreign direct investments.

   Investment TIP: Again, I will throw some ETFs.

-      Market Vector Russia ETF (RSX): focuses on 46 companies in Russia weighing 40% in oil and gas.

                                 also considered as the biggest and the most liquid one in the market

              **If you are looking for small-cap ETF in the same segment, follow RSXJ which gives investors more exposures to the local economies**

-      iShares MSCI Russia Capped Index (ERUS): more concentrated one focusing on 27 companies weighing 50% in oil and gas

Young G.

1 comment:

  1. Russia ? The premium of being governed is much too high (a little less than Mexico) so PASS !