On Monday, July 23rd, Reuters announced that the Industrial Bank of China (ICBC) surpassed Citigroup in terms of market capitalization, and is now the “largest” bank in the world. However, it still doesn’t mean the bank is truly the greatest in the world. It simply means that investors in Shanghai actively trade the stock, pushing it up higher. Names like Bank of America, Citigroup, UBS and HSBC will still not be forgotten in today’s competitive world. ICBC’s profits in 2006 of USD 6 billion are one third of Citigroup’s and its return on equity of 14 percent is quite weak even in the Asia-Pacific marketplace. It’s price-to-earning (P/E) ratio of 25 times earnings is quite high for the banking sector, averaging 15 times earnings. All in all, ICBC is overpriced value made it the record-breaking largest bank in the world.
Google (GOOG) has been a popular stock these days. Recently they have surpassed USD 550.00 per share. Their all time low in the autumn of 2004 was only USD 100.00 per share. That's a 450% increase and it hasn't even been three (3) years. It is quite evident that Google is the number one internet marketing company. They have a larger marketshare than Yahoo! and even good old Microsoft in the web industry. Google is the creme de la creme of the internet and it will forever be. Its website has consistantly been number one in internet traffic according to web traffic analytics company Alexa. People won't stop going to google, since they are simply the best at what they do. Most internet users would tell you they use Google for search and e-mail amongst other things.
So if the bubble keeps expanding, there is potential for Google to be the next Qualcomm. But, what if the bubble pops? There can be a lot to gain, but likewise, a great risk for loss.
As of now, the Canadian dollar is nearing break even with the United States Dollar. On Friday, the exchange rate for USD 1.00 equated to a little less than CND 1.05. This shows the strength in the Canadian currecency over the US ones. Remember ten years ago, when the US Dollar was equivalent to CND 1.50?
The power of foreign exchange is amazing. If you traded USD 100,000.00 into CND 150,000.00, today you would have around USD 143,000.00.
If you invested USD 100,000.00 into an investment returning ten percent per annum, you would have USD 260,000.00 today.
However, if you had bought into some sort of Canadian investment with an average ten percent appreciation each year, your profit would be much more than that. So let us combine the two and create a synergy:
USD 100,000.00 > CND 150,000.00
CND 150,000.00 x 1.1^10 = CND 390,000.00
Today, CND 390,000.00 would equal roughly USD 370,000.00 at a USD 1.00 = CND 1.05 exchange rate.
Your internal rate of return would be approximately 27% and not just the usual 16% if your investment remained in the United States.
All in all, foreign exchange (forex) and general investing creates an unbeatable synergy. Your risk might even be lowered as your investments would be diversified, not all focused in your home land.
Now the question is, when will the US and Canadian Dollars be 1 to 1…
Macedonia is a new business haven in Europe. I was just reading today's issue of the Financial Times (FT) newspaper and I see their special segment today on the nation. There have been many special incentives offered to foreign investors, such as no corporate tax for ten years and ten percent thereafter. No personal income tax for five years and only five percent therafter. These rates are even lower than Hong Kong! Even more, there is no Value Added Tax (VAT) or custom duties for export production. They are even offering free connection to utilties like water/sewer, electricity and natural gas. Infrastructure there is decent as well with international airport, railroads and roads all built out. Leading multinational companies can get up to 500,000 euros for training staff and building facilities. Concessionary land leases are offered for up to 75 years.
Macedonia also has Free Trade Agreements with 27 European Union (EU) nations and 13 other European countries, with a total of 650 million customers. Average gross salary is only 370 euros a month, a lot more affordable compared to Western Europe. Macedonia is also quite economically stable as shown in the past five years, with inflation under two percent.
Best of all, benefits for businesses only take 10 days to approve and businesses can be registered in 2 days. Yet, all of these benefits seems too good to be true. If one were to open a small business, I don't see how all these benefits would be provided to them. The target seems to be large multinational companies like Microsoft or Glaxo Smith Kline.
Blackstone Group (BX) is a leading private equity firm that just went public a couple weeks ago. It is evident that their stock has been going downhill over these times and even went belong its offering price. Some critics say that Blackstone Group went public so that it's principal partners could cash out.
Following Blackstone Group's IPO, other buyout firms like Kolberg Kravis Roberts & Co (KKR) have expressed interest in going public.
Personally I feel the BX would be a wonderful investment, but that's just me. I don't own any shares yet and I am glad I did not buy in to it, but it seems like a good long-term investment, as Blackstone Group has many high quality investments and owns companies that no longer trade publicly. So by investing into Blackstone Group, you can have a diversified interest in its portfolio companies to a certain extent.
These past years, Goldman Sachs, a investment banking firm, has surged rapidly due to their ability to take risk and make money of it by buying stakes into many successful companies such as the Industrial and Commercial Bank of China (ICBC), China's largest bank. The question is: Could Blackstone's stock be the next Goldman?
Furthermore, the Chinese government also invested in a ten (10) percent stake in Blackstone. Is that a good sign? One of the world's most affluent governments buying into it... meaning you should too... As of today, it's stock doesn't seem like it would follow that concept. Perhaps it's overpriced, who knows?