The NY Times reported that the Israeli Shas Party leader David Azoulay has declared that anyone who follows Reform Judaism is, in his view, “not a Jew.” So I was thinking about finding another bolthole in case things get tough in the USA and I need to emigrate like my parents did from Germany in the 1930s. Israel may be out for a member of the most beautiful Reform temple in Manhattan, Central Synagogue.
Portugal offers a mixed message. If you are named Azoulay, like the Shas politician, you can easily win Portuguese citizenship without having to make investments or give up your existing passport and with no residence requirement. The special deal applies to those of Sephardic descent, whose ancestors were illegitimately ousted from Portugal in 1500, a few years after the Spanish Jews were also expelled, in 1492.
Of course with two German-born parents (who met and married in the USA), I cannot claim Sephardic ancestry. Sephardic (Spanish) Jews follow a different ritual which dates back to the period when their ancestors lived on the Iberian Peninsula, in Spain or Portugal. My family were firmly Ashkenazic (Hebrew for German which also includes Yiddish-speakers from points eastward).
So this country where I am for a conference will not admit me for being descending from expelled 16th century victims of religious persecution. This despite the fact that my father's parents actually fled from Germany via Occupied France, Unoccupied France, Spain, and Portugal. They sailed from Lisbon to New York in 1941, before the US entered World War II. Portugal was neutral and moderately pro-British at that time, whereas Spain was still pro-Fascist.
Anyway, there are other options for gaining Portuguese and European Union residence, but they take at least $400,000 of investment at present exchange rates, plus 5 years of intermittent residence in Portugal, more than I am prepared to put up with.
Anyone who is Sephardic may want to contact www.lugna.pt to find out more. We have one reader for sure who qualifies.
The theory that commodities are a separate investment category has been disproven by the impact on commodity prices of the continued Chinese stock market collapse. China's biggest market in Shanghai fell by 5.9% on Wednesday despite frantic measures by the Beijing authorities to try to prop it up. And the share dump hit Hong Kong which after holding out so far, is also off 5.8%. Even Japan is down about 3.2%. The opening in Europe was also in the green.
In the green by the way is Chinese convention. Since red is considered a lucky color, it is used for stock prices rising, while green is used for those falling. For round eyes, it is really easy to work that out because the Chinese show market trends with a plus or a minus sign, a number in normal format, and a percentage sign. Along with gates at the airport and train platforms, this enables you to find your way without knowing any Chinese.
The linkup of Shanghai and Hong Kong was implemented by a Chinese team which included one of our former writers, with a Shenzhen MBA, an American passport, and a good eye for capitalist success. She quit because she was no longer free to write her views and then recommended a fellow journalist with good English skills who lacked her stock-picking skills. So we more or less exited from China too soon for the 2015 rise in the local markets, and the sell-off which began mid-June.
Our former reporter is now on the spot as a facilitator of linkage between Shanghai and world markets. The ban on initial public offerings and the funding of a brokerage pool to finance margin purchases have failed to boost share prices. Insurance companies have been ordered to buy stocks.
The regime's panic measures have certainly shown that China does not yet have a normal stock market. Fei may come back and report for us again if things do not improve.
China Fallout
*Brazil's Vale (VALE) was hit along with its rivals by the fall in the landed price of iron ore in Qingdao on Wednesday to $44.59 per metric tonne. It is more than 6 years since iron ore was so cheap, in the global financial crisis. Happily, VALE is actually able to make a profit with ore at these levels because its current cost for mining ore is just under $20 per tonne, to which you have to add freight. This month, as opposed to the last selloff in May, 2009, freight costs about $21 per metric tonne of iron ore shipped from Brazil to China, thanks to lower fuel costs now. Vale also is being given Chinese help in financing its Valemax ore carrier ships this time round. China is also funding about 20% of Vale's capital expenditure for developing the huge Carejas mine which is about halfway built now, and which goes live in 2018. Current projections are that this ore will cost only $15/tonne to mine, being so rich, 66% pure iron, the cheapest iron ore in the world. Do not panic. Be iron-hearted.
*Fluffier stocks are under greater attack, notably social media giant Tencent, listed in Hong Kong, which now has a link to Shanghai trading just in time for trouble. As of this morning, some 40% of Shanghai stocks had all trading suspended to stop the free fall in prices, which pushed the panic over to the linked market where TCTZF is a leading tech stock. Tech, mostly small startups, is where the mid-June selloff began, in Shenzhen, the city just north of Hong Kong in China proper, before hitting Shanghai and now bouncing back to the Pearl River basin again.
The China selloff has also hit Naspers (NPSNY) of South Africa, a 32% owner of Tencent (TCTZF), which more or less accounts for its entire stock market valuation—despite media assets in Russian, Brazil, and black Africa which have considerable value. NPSNY is an even more obvious buy than TCTZF in my view.
Note that our buys of NSPNY and later of TCTZF were not based on Chinese advice, but on the work of Africa hands among our reporters one of whom also quit for a government posting before returning in triumph.
*Commodity selling has also affected the oil industry but smart investors are getting into oil now, perhaps prematurely. George Putnam III of The Turnaround Letter was quoted on Wednesday by a Putnam- related newsletter, Dick Davis Digest, as calling BP plc (BP) a buy. With its yield near 6%, its Deepwater Horizon fines under control, and rumors of a takeover bid, I could not agree more.
Drug Dealers
*Bank of America Merrill Lynch has put Glaxo Smith Kline (GSK) back into the market weight column after throwing it out last Dec. and calling it an underweight. This follows a general boost in drug stocks by the thundering herd after the Supremes backed Obama-care again. It does not take into account a cloud over GSK from suits over birth defects allegedly caused by its Zofran anti-depressant drug.
*Novartis (NVS) won rapid US FDA approval for its new Entresto drug for heart failure which aced phase III trials earlier this year. It greatly reduced the incidence of further heart failure and death in those hospitalized for heart failure which led the regulators to approve it fast. Leerink Partners, a brokerage, predicts that the drug will be a blockbuster for NVS and wind up being prescribed for about 3 mn heart failure patients per year, about half of those hospitalized, for whom it is suitable. While not cheap the Swiss developed drug will save money which would have to be spent on future hospitalization of people with heart failure as well as improving their survival.
*Martin Ferara, who may be eligible for Portuguese nationality, deserves a big round of applause for pushing us into spun-off Invidior (INVVY), which was one of the rare shares to rise in Britain yesterday. It makes a tamper-proof narcotic used to stabilized heroin addicts, mostly in the USA. It was spun off by Reckitt Benckiser, which also performed well. Up 54.5% YTD (in sterling not US$s), INVYY rose a further 3.5% yesterday. If Martin (who was born in Rhodesia to Sephardic Jews whose ancestors were from Rhodes, Greece) decides to become Portuguese in addition to being Canadian and perhaps Zimbabwean, I hope he will continue to pick stocks for us.
Subcontinent Markets
*Dow Jones reported that India Nivesh Securities, while warning about limited upside in Indian IT stocks, made an exception for Infosys (INFY) as we move to getting Q1 results. The Indian FY ends Mar. 31. The local broker quoted by DJ says that INFY is expected to report a 3.4% sequential rise in profits over Q4 2014-5.
*In www.Seekingalpha.com, Sarfaraz A. Khan, who from his name is not neutral, tipped Global X MSCI Pakistan Fund (PAK). He calls PAK “a hidden gem of frontier markets.” We bought a sister fund listed in Hong Kong before PAK was launched, led on by my college friend and Lahore broker T. Ali. Because US PAK and the Hong Kong and Luxembourg variants are all buying the same portfolio (and all are run by Deutsche Bank) they can keep costs down. The PAK annual fee is 0.88%, extremely low for a frontier fund with limited US appear.
I delivered my first talk at the liveandinvestoverseas conference in the Algarve packed up a Pakistan-made dress in her wardrobe for the events. To give 3 speeches in 3 days I have with me one Chinese-made dress, one German one, and one Pakistani one. The latter is my favorite and I am saving it for Friday.
Vivian is holding forth a talk about global investing at the www.liveandinvestoverseas.com conference and that you can find out more by visiting www.global-investing.com where she will tell about the meeting and advise about moving to Europe with dogs.
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