As of late May, over 200 Japanese stocks with market caps above $1 billion also have dividend yields greater than 2 percent, with dividend payout ratios less than 50 percent. In other words, these dividends should be well covered by earnings, and have room to grow. Something interesting is happening in the Land of the Rising Sun.
While cities, states and the U. S. government issued stringent health guidelines, the Federal Reserve and Trump Administration committed to massive action to steady financial markets and the economy. Broadly, the iShares MSCI Emerging Markets ETF tracks over 800 large- and mid-sized companies in China, Taiwan, Korea, India and more. We recommend going a step further and focusing on exposure to Taiwan via iShares MSCI Taiwan ETF and India via WisdomTree Indian Earnings Fund. These two countries offer terrific demographics and the ETFs participate in ample exposure to technology companies.
U. S. inventory and bond markets will be in a situation of dilemma. The S&P and additional benchmark indices for Circumstance. S. stocks are going on new all-time heights, anticipating a soft touchdown for the economy, manufactured with finesse by typically the Federal Reserve. The Circumstance. S. bond market looks much more concerned—there is usually nothing normal about a 10-year Treasury bond below 2% and a 90-day Treasury bill above 2%. More daunting is that this relationship in yields has historically signaled negative economic growth in the near future. In a lower forever environment, economically solid high-yield corporate bond funds offer solid income with manageable risk. Last year, nothing seemed to move global equities markets more often or with more tenacity than headlines renewing optimism or pessimism around U. S. and China trade talks. The Phase One U. S. -China deal in December propelled a late-year spike in global stocks and an advertising year for global equities.
The Japanese equity market has slipped 20 percent from its five-year high, reached last August, reflecting an economy unresponsive to monetary stimulus. Despite this gloom, many Japanese companies have the financial wherewithal to reward shareholders with dividends. These companies are typically creating innovative and value-added services, introducing popular data plans and benefiting from supportive local regulations. Similarly, in the more mature segment of technology, “legacy tech” companies also have managements committed to reinvigorating growth. Even though these companies have valuable proprietary technology, sell-side analysts put some of them in the dinosaur category.
Market pessimism can give investors a chance to buy world-class technology franchises in transition. But exploration and production costs have recently turned upward in pressure pumping, sand, rail, trucking and labor. Oil-producing nations, including OPEC members as well as U. S. shale producers, cannot afford to spend more cash than they generate. As industry profits get squeezed, oil and gas companies’ credit ratings deteriorate, constricting lending to energy.
Like a black swan flying against a dark night sky, the Covid-19 virus arrived without much warning, affecting our personal and financial lives. The impact on nearly every asset class available was swift and brutal. The optimism that defined the start of a new decade quickly cycled to anxiety, denial and outright fear.
Strong growth and favorable industry exposure combine for promising opportunities for investors. A weakening U. S. dollar also gives life to foreign stocks. Research shows that in the years when the American currency is relatively weak, shares abroad go up 85% of the time.