Author Topic: Best ex-US countries to buy stock in?  (Read 1901 times)

ChpBstrd

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Best ex-US countries to buy stock in?
« on: March 06, 2017, 04:04:10 PM »
I want to diversify my equities exposure internationally (i.e outside the US). I want to align my approach with some sort of long-term investing thesis, although I am aware that GDP growth is not associated with returns. I'm curious about what Mustachians think about the following countries / ETFs. Anyone who lives there want to chime in?

China - FXI
pros - growth, global dominance in manufacturing
cons - historically, investments underperform because the gains somehow don't make it to shareholders, political risk,

Australia - EWA
pros - historically rock-solid financial, political, legal, and currency systems, low corruption.
cons - real estate bubble? dependence on China.

Brazil - EWZ
pros - has gotten cheap, demographics, recession is over
cons - oil dependency, corruption

India - INDA or PIN
pros - demographics, recent growth, recent reforms
cons - cultural issues like religious nationalism, next war with Pakistan, caste system, corruption

I'm not particularly interested in the following countries for the following reasons:

Russia - corruption, pending invasion of Ukraine
Canada - US dependency/correlation - why bother?
Most of Europe - pending euro collapse, standoff with Russia
Most of Africa - corruption
Japan - low potential growth rate due to demographics, pending conflict with China

tiberius

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Re: Best ex-US countries to buy stock in?
« Reply #1 on: March 06, 2017, 04:40:54 PM »
I want to diversify my equities exposure internationally (i.e outside the US). I want to align my approach with some sort of long-term investing thesis, although I am aware that GDP growth is not associated with returns. I'm curious about what Mustachians think about the following countries / ETFs. Anyone who lives there want to chime in?

China - FXI
pros - growth, global dominance in manufacturing
cons - historically, investments underperform because the gains somehow don't make it to shareholders, political risk,

Australia - EWA
pros - historically rock-solid financial, political, legal, and currency systems, low corruption.
cons - real estate bubble? dependence on China.

Brazil - EWZ
pros - has gotten cheap, demographics, recession is over
cons - oil dependency, corruption

India - INDA or PIN
pros - demographics, recent growth, recent reforms
cons - cultural issues like religious nationalism, next war with Pakistan, caste system, corruption

I'm not particularly interested in the following countries for the following reasons:

Russia - corruption, pending invasion of Ukraine
Canada - US dependency/correlation - why bother?
Most of Europe - pending euro collapse, standoff with Russia
Most of Africa - corruption
Japan - low potential growth rate due to demographics, pending conflict with China

Japan has looked great for the last year. Lots of world beating companies. Possibly reaching a peak.

Eucalyptus

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Re: Best ex-US countries to buy stock in?
« Reply #2 on: March 06, 2017, 06:07:41 PM »
I want to diversify my equities exposure internationally (i.e outside the US). I want to align my approach with some sort of long-term investing thesis, although I am aware that GDP growth is not associated with returns. I'm curious about what Mustachians think about the following countries / ETFs. Anyone who lives there want to chime in?

Australia - EWA
pros - historically rock-solid financial, political, legal, and currency systems, low corruption.
cons - real estate bubble? dependence on China.


Aus; definitely agree on the real estate bubble. Our Real Estate is quite complex by state and city of course, some areas are worse than others, but they definitely operate on different state cycles (and even unit/house and parts of city cycles).
Other cons; very heavy weighting on financial services, in particular the big four banks. Compared to banks worldwide in general, they are very well managed and stable though. Was a very heavy dependence for a while on mining resources, though they have already tanked.
Federal Gov. Not that great money managers currently, really. They sell themselves as so, but plenty of indicators say no.

Pros; Its a Federalised system of states...states have lots of control and impact on things. Some state governments are relatively smart and progressive. In SA they are working hard on new tech and renewables for example, same in ACT and WA. WA Gov is about to have an election, and they are conscious there of their previous reliance on mining industry, and looking at ways to diversify in the future. Similar in SA; manufacturing industry is drying up, state is working hard on other avenues (eg Defence manufacturing, advanced ag/food, etc).

Currency; we have our own currency. Gov can always print more money. Bonds are super safe. AAA credit rating (inc I think most if not all states).

Aus dependency on China is over-rated/over-hyped. Across industries the country works pretty hard to diversify customers. China dependency is more mining/coal exports related, the former of which has already tanked, the latter of which is building, but, there is political pressure to move away from exporting it (this is where the current Federal and Qld Governments are pretty stupid).

highflyingstache

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Re: Best ex-US countries to buy stock in?
« Reply #3 on: March 06, 2017, 08:50:17 PM »
Canada:
3% of the makeup in total, so keep it small in the portfolio, I'd say. Maybe less the dependency of the US, more the dependency of natural resources and housing. We put so much behind oil, trees (certainly secondly) and a few side projects less of mention. So, we are oil, essentially, with a US distribution base.
Secondly, an overvalued housing market in some areas (Vancouver, Toronto, less Calgary) then undervalued (East coast, non populous areas).

That's what we're riding on. If you want to play niche games, you can watch the different moves in said oil or housing markets. Otherwise, I wouldn't play either.

SwedishMoustache

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Re: Best ex-US countries to buy stock in?
« Reply #4 on: March 07, 2017, 02:25:50 AM »
Hey!

I don't know about what sort of tax situations you're in, but i can highly recommend Scandinavia as an investment zone. Of course, as a swede i'm biased, but the fact is that swedish companies and funds handsomely beat out international and european funds. Also, we don't have the euro - neither does Denmark or Norway for that matter. As a swede, about 52% of my investment equity is in our currency SEK with about 39% in USD and the rest split into EUR and CAD as well as some NOK.

What speaks in favor of sweden is an array of extremely stable and old companies (80-120 years under the belt), a very strong industrial sector, as well as an historically and currently higher average dividend yield compared to the US and other markets (more close to 4-5% than 2-3%). What speaks against sweden is the rather annoying habit of only having dividend payouts once or twice annually. Not sure if you're investing in dividend stocks or ETF's, but this tendency will follow you no matter what.

We also have some extremely strong dividend payers like Telia where the government themselves are partial owners. I love these, but it's a personal preference. The big difference between Sweden and US is that stock investing is a very popular past-time here. A LOT of swedes invest in stocks, which creates a very favorable investment climate for us (for instance, the taxation on stock accounts is 0.35% annually on the total equity of your portfolio).

Some stocks i find extremely favorable, and would recommend to friends from other countries are:

Sweden:
* Atlas Copco
* Investor
* Axfood
* Beijer Alma
* Castellum
* Intrum Justitia
* Skanska
* NCC
* Tieto
* Swedish Match
* Hennes & Mauritz (With an asterisk - the stock is currently being revalued)
* Assa Abloy
* Nibe
* Kinnevik
* Latour
* Atrium Ljungberg
* AstraZeneca


Norway:
* Norsk Hydro
* Gjensidige Forsikring
* Bakkafrost

Finland:
* KONE
* Fortum
* UPM-Kymmene

I would also suggest Germany, with the following companies (which i own stock in as well):

* Munich Re
* Allianz
* Daimler
* BMW
* Linde
* Bayer
* BASF
* Siemens
* K+S

Good luck :).
« Last Edit: March 07, 2017, 02:33:59 AM by SwedishMoustache »

bwall

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Re: Best ex-US countries to buy stock in?
« Reply #5 on: March 07, 2017, 08:01:08 AM »
My company does business in China and I've been there on business trips regularly since 2010. I wouldn't touch their stock market with a 10ft pole. Waaaaayy too much risk. Regulators don't do their job, accountants put up the numbers the boss/CEO says and on more than one occasion, the boss/CEO wire transferred the company funds to his private account and disappeared, company goes broke. And I'm talking about publicly traded companies.

Also, there are the reverse listings that Chinese companies have done to get on the NYSE; buying up a publicly traded shell company just for the ticker symbol, renaming the company as their name and now that they're 'kosher', they issue lots of stock which then rapidly depreciates.

No concept of shareholder value exists in China. I'd say that the same holds true for India, but I've never been there.

I do agree with SwedishM's comments about Scandinavia. There are plenty of good companies there run by honest hard working people.


MustacheAndaHalf

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Re: Best ex-US countries to buy stock in?
« Reply #6 on: March 07, 2017, 08:34:53 AM »
Vanguard Total International is hard to beat, not that some people don't try.

ChpBstrd - can you really 100% predict the future of countries?  And every stock within them?  Not sure I believe that.
But I'm expecting indexing advice to fall on deaf ears.  Still, consider tracking your skill against an index like Vanguard Total International so you know how that would have done as a benchmark for you.
« Last Edit: March 07, 2017, 08:36:55 AM by MustacheAndaHalf »

ChpBstrd

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Re: Best ex-US countries to buy stock in?
« Reply #7 on: March 07, 2017, 09:04:21 AM »
Vanguard Total International is hard to beat, not that some people don't try.

ChpBstrd - can you really 100% predict the future of countries?  And every stock within them?  Not sure I believe that.
But I'm expecting indexing advice to fall on deaf ears.  Still, consider tracking your skill against an index like Vanguard Total International so you know how that would have done as a benchmark for you.

No, I certainly can't predict their future. For example, who could predict the recent meltdown of Brazil? However, that doesn't mean I throw my money into, say, Venezuelan sovereign bonds or Chinese miracle cancer-cure startups just for the sake of increasing diversification. There comes a point when it's better to stop diversifying than to be the dumb money in investments that are basically scams. The same is generally true for US penny stocks.

The goal isn't to stock-pick or economy-pick, it's to simply diversify while not getting scammed. The ETFs I'm looking at might have a few basis points higher fees than VTIAX or VGTSX or VXUS but to some extent they enable investors to be pickier and avoid the worst examples of investor fleecing (which have been enabled by the flood of money into passive ETFs like those total international funds).

Maschinist

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Re: Best ex-US countries to buy stock in?
« Reply #8 on: March 07, 2017, 02:58:53 PM »
I want to diversify my equities exposure internationally (i.e outside the US). I want to align my approach with some sort of long-term investing thesis, although I am aware that GDP growth is not associated with returns. I'm curious about what Mustachians think about the following countries / ETFs. Anyone who lives there want to chime in?

China - FXI
pros - growth, global dominance in manufacturing
cons - historically, investments underperform because the gains somehow don't make it to shareholders, political risk,

Australia - EWA
pros - historically rock-solid financial, political, legal, and currency systems, low corruption.
cons - real estate bubble? dependence on China.

Brazil - EWZ
pros - has gotten cheap, demographics, recession is over
cons - oil dependency, corruption

India - INDA or PIN
pros - demographics, recent growth, recent reforms
cons - cultural issues like religious nationalism, next war with Pakistan, caste system, corruption

I'm not particularly interested in the following countries for the following reasons:

Russia - corruption, pending invasion of Ukraine
Canada - US dependency/correlation - why bother?
Most of Europe - pending euro collapse, standoff with Russia
Most of Africa - corruption
Japan - low potential growth rate due to demographics, pending conflict with China

It looks like you want to buy Vanguard VWO with 0.14% fees per year:
~21% China
~16% Taiwan
~12% India
~9% Brazil
...

The fees on your ETF's are much to high.
Your China FXI Ishares for example has 0.74% fees per year. Crazy!

The only country I currently invest a few % with a specific Ishare ETF is Singapore,
because valuation is very low and I dont get this country with Vanguard with substantial %.
http://www.starcapital.de/research/stockmarketvaluation

With Vanguard VTI and VXUS you are 95% good to go.

If you want to optimize the last 5%:
With a few % VWO you can invest more into emerging markets (is already a small part of VXUS).
With VNQ you can invest some money in US-REITS and historically slightly reduce portfolio volatiliy
« Last Edit: March 07, 2017, 03:06:59 PM by Maschinist »

jinga nation

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Re: Best ex-US countries to buy stock in?
« Reply #9 on: March 08, 2017, 08:59:27 AM »
OP doesn't want to invest in certain regions due to pending conflict.

Well, the USA is in perpetual pending conflict due to its global military presence. NK, Iran, Russia. That hasn't stopped anyone from investing in US equities.

VTI for the world, or VWO for BRIC, they say, eh! Comparison chart for VTI-VWO-VEA:
https://goo.gl/qAW7Ga