>>> (2008) New Russian Ruble ETF Offers Several Interesting Trading Possibilities
Nov. 16, 2008
About: CurrencyShares Russian Ruble Trust ETF (FXRU)
The Russian Are Coming
Rydex launched a ninth CurrencyShares ETF on the NYSE Arca platform Thursday, giving investors the first Russian ruble exchange traded fund. The fund, which trades under the ticker symbol XRU, offers U.S. investors a long ruble/dollar pair trade. It holds 1,000 rubles per share and closed 3 cents above its NAV of $36.36 yesterday. The fund charges 0.40% in expenses, in-line with other CurrencyShares funds, and slightly cheaper than other emerging market currency funds.
Russia’s economy has been especially hard hit by a deadly combo of plummeting oil prices and the global economic downturn. The result has been chaotic trading that has forced the country’s major exchanges to shut their doors regularly as they try to stem the tide of asset outflows. The Market Vector Russia ETF (NYSEARCA:RSX) is down 73% YTD as a result and the ruble hit a two-year low against the surging U.S. dollar in October. Demand destruction in most commodities is expected to continue taking its toll on Russia’s resource-heavy economy for the foreseeable future.
Possible Trading Strategies
Other than using XRU as a pure play on the ruble, several other interesting plays for the new fund have been suggested. Eric Rosenbaum of Index Universe quotes Rydex’s Director of ETF Strategies, Ed Lopez, as suggesting a long ruble/short euro pair trade. These two currencies “have a particularly high correlation, so investors can short the euro and its smaller yield (due to central banking policies in Europe) and go long the ruble, which has a central bank rate of 12%.”
Another way to take advantage of the ruble’s high yield was suggested to me by Rydex Senior Product Developer, Phil Bak, who points out the ruble has a fairly high correlation to the energy sector in general and to crude prices specifically. By shorting oil and going long XRU, investors can collect the current interest rate of 15.5% (as of Friday), paid out monthly, while minimizing risk to their underlying capital.
Another benefit of XRU pointed out by Bak is that it’s the first BRIC country currency fund to employ an ETF – as opposed to an ETN – structure. The inherent risks of the ETN structure, which is essentially an unsecured debt offering from the issuer, became clear with Lehman’s bankruptcy, and the subsequent implosion of the company’s Opta ETNs.
As quoted in the Index Universe story linked above, Lopez concedes the fund may be slow to gather assets in the current environment, as BRIC currency carry trades have dried up for the time being. Still, Rydex remains confident in the superior structure and overall demand for such an ETF. XRU ended its first day of trading with just over $3.6 million in assets.
>>> Vipshop Holdings Limited, through its subsidiaries, operates as an online discount retailer for various brands in the People's Republic of China. It offers a range of branded products, including apparel for women, men, and children; fashion goods; cosmetics; home goods and other lifestyle products; footwear; sportswear and sporting goods; luxury goods; and gifts and miscellaneous products. The company provides its branded products through its vipshop.com and vip.com websites, as well as its cellular phone application. Vipshop Holdings Limited was founded in 2008 and is headquartered in Guangzhou, the People's Republic of China. <<<
>>> Abengoa, S.A., an engineering and clean technology company, provides solutions for energy and environmental sectors worldwide. It operates in three segments: Engineering and Construction, Concession-Type Infrastructures, and Industrial Production. The Engineering and Construction segment is involved in the engineering and construction of electrical, mechanical, and instrumental infrastructures in the energy, industrial, water transport, and services sectors. This segment is engaged in the development, design, and construction of renewable energy, including solar, ethanol, biodiesel, and biomass plants; power transmission lines; conventional energy plants; and water treatment, desalination plants, other hydraulic infrastructures, and industrial installations, as well as provision of operation and maintenance services for conventional and renewable energy power plants. It also involved in the development of solar-thermal technology, water management technology, and technology businesses, such as hydrogen energy or the management of energy crops. The Concession-Type Infrastructures segment is engaged in the construction, operation, and maintenance of power transmission infrastructure, conventional and renewable energy plants, and water generation, transportation, and management facilities, including desalination, treatment and water purification plants, and water pipelines. The Industrial Production segment develops and produces biofuels for transportation, which are used as components of gasoline or for direct blending with gasoline or diesel. This segment also produces distillers, grains, and solubles; sugar; and electricity and carbon dioxide as by-products of the ethanol production process for sale to third parties. Abengoa, S.A. was founded in 1941 and is headquartered in Seville, Spain.
Pure Circle -- >>> Investing In The Sweet And Potentially Lucrative Stevia Pie
Feb. 3, 2014
About: PCRTF, Includes: KO, PEP, SANW, STVF
When we start talking about two-year returns in excess of 550%, investors automatically assume biotechnology or possibly some small/midcap technology company with a major and unexpected partnership. Yet regardless of what comes to mind, the actual list of companies to produce such gains is small. What might be the most surprising company on that list is one called PureCircle (OTCPK:PCRTF).
Sure, more than likely you've never heard of PureCircle. Well, it's a billion-dollar company in the agricultural space-- definitely not as glamorous as a biotechnology company, but more efficient. And when I say more efficient, I mean less risk and just as much upside-- and this is in an industry that could turn tens of millions into tens of billions in annual revenue. Yowza!
So what is this industry? Will PureCircle's rally days continue? And are there more companies in line to join this party?
What is PureCircle?
PureCircle is the worldwide leader in all things stevia, a zero calorie all-natural sweetener that is 300 times sweeter than sugar. Recently, stevia has been dubbed (perhaps a little quasi-grandiose) "the Holy Grail" of the sweetener industry, which might have something to do with PureCircle's large returns.
With that said, for PureCircle to produce such impressive returns over the last two years it must have grown rather fast. So let's look at a few key fundamental metrics from 2011 to 2013.
Obviously, PureCircle has grown fast over the last two years, approximately 43%, and the company has improved its efficiency by a far greater margin. However, the fundamental growth seen in the chart above hardly validates such a large return.
PureCircle trades at multiples that are very similar to what we see in social media or with orphan drug companies. Currently, it is trading at 13.1 times last year's sales and 53.2 times gross profit; the latter is about twice the premium of LinkedIn (LNKD) to its gross profit.
However, when you look at industry trends and consider the outlook, PureCircle might have more upside potential than any orphan drug company or the likes of LinkedIn. In particular, PureCircle with $76.2 million in revenue is the world leader in stevia-based products. Yet, it operates in a sweetener market that is estimated at $60 billion globally.
According to the World Health Organization, stevia could one day own 20% to 30% of that $60 billion market, or $12-$18 billion. As such, there is quite a bit of room for PureCircle to grow.
Why is This Industry Growing so Fast?
For PureCircle's growth over the last two years and the rather bullish long-term outlook, investors can thank former Mayor Michael Bloomberg of NYC, health organizations, local politicians, and the consumer's overall increase of knowledge surrounding the health risks of sugar intake.
Over the last year or so, major food and beverage companies have felt increased pressure from all of the above sources to produce healthier alternatives and low calorie alternatives to high-sugar products. Last year a calorie limit was implemented in school vending machines, which consequently removed most Coca-Cola (KO) and PepsiCo (PEP) products. This is just one of many changes that have occurred, which has left these large corporations desperate and rapidly trying to implement stevia into their products to lower calories. It's important to note that even diet sodas have felt the wrath of a more health conscious consumer, as sales volume has fallen approximately 12% over the last six years.
This brings the conversation back to PureCircle, which is a great gauge of the trends in the stevia market. According to its 2013 annual report, PureCircle finished the year with 300 customers, which was an increase of more than 200 over 2012. Furthermore, stevia volume increased 89% in 2013, significantly higher than growth. But as PureCircle notes, this volume has "not yet" translated into revenue growth due to high inventories by partners.
Nonetheless, PureCircle is seeing a rapid boost in demand and, as a result, the firm has had to make major operating changes. For one, demand has become a real issue. And what's alarming is that stevia is not even a fraction of how large experts believe it could become. In addition, the U.S. and many other countries are not well positioned to harvest stevia, as most land for sweeteners is allocated to grow sugar. Consequently, PureCircle is faced with a dilemma where acreage is precious. Since PureCircle doesn't actually grow its own products (PureCircle partners with local growers), the company is now seeking (and has previously sought) partners in new land.
Overall, if PureCircle can manage demand and stay on top of supply, then it can grow many times larger over the next decade.
Is PureCircle Your Best Stevia Investment Option?
As we stand today, there really aren't a lot of investment options for stevia. Cargill might come to mind (as the owner of Truvia), but unfortunately it is a private company and one of the most visible agriculture businesses in the world. In essence, PureCircle has soared over the last two years because the options are limited, but it has now reached a valuation that is rather pricey. What are some other options?
S&W Seed (SANW) and Stevia First Corp. (OTCQB:STVF) are the only two options that really come to mind, although both are small companies.
S&W Seed is an alfalfa seed grower, but has connections to stevia. In a recent article, Henry Kawabe did an exceptional job at highlighting S&W as a stevia business, including its move from a commercial to a research company.
PureCircle actually chose S&W as a partner in North America to supply stevia. More than likely, this partnership was less about S&W as a company, but rather its acreage and positioning in California's Central Valley, which is the agricultural capital of the country. In late 2012 to early 2013, speculation surrounding this partnership caused shares of S&W to nearly double, as investors saw a great opportunity with stevia as a larger revenue stream than alfalfa seeds.
Unfortunately, S&W botched its first stevia harvest by adding herbicide and has since been very hesitant to speak of or discuss plans as it relates to its stevia ventures. In fact, due to the botched harvest and millions it cost S&W, the company has transitioned from commercial harvesting of the commodity to focusing almost solely on research. While this might be good for S&W long-term, it is bad for PureCircle, a company that still needs more stevia production. This also takes S&W out of the running for becoming a prime North American stevia grower in the near term.
I urge you to read Henry Kawabe's article for a full discussion of this topic, including filings and quotes from the company.
This brings up Stevia First, which is just a $30 million company, but has spent the better part of its existence in research & development. The reason it must be included in the stevia conversation is because this is one of the few companies that has ambitions of large-scale production of stevia in North America.
Over the last six months Stevia First has had its valuation increase 50%, which has occurred due to the company's own transition from clinical research to commercial production. Stevia First now has its own product; it recently completed a taste test, and you can hear about the company's future plans and its products in the CEO's recent interview on Bloomberg.
What makes Stevia First interesting for the future is the growth potential of the crop, the firm's emphasis on research, and its positioning. Stevia First is located in the same region as S&W, in the Central Valley with more than a 1,000 acres to harvest. This is precious land to a company such as PureCircle-- and more importantly, Stevia First owns a patented fermentation process from Vineland Research that essentially removes the aftertaste from stevia.
The aftertaste associated with stevia has been the Achilles Heel of the industry, as it makes combining with food and beverages very difficult. However, Stevia First's technology allows the company to modify stevia and tailor-make it to a product-- and (like I said) without an aftertaste. This could be huge for the stevia industry and a company like PureCircle who is seeking partners and increasing its scale rapidly.
However, as attractive as Stevia First may appear to potential partners and perspective investors looking to enter this space, risks must also be acknowledged. For one Stevia First is an OTC stock, meaning it does not trade on one of the large exchanges. Also, Stevia First is solely focused on the development of stevia products, which means there are risks associated with whether or not this market grows to meet expectations.
Furthermore, Stevia First has spent many years in research, ensuring its stevia is a best-in-class product and that it minimizes risk. However, due to its size, the company can not afford any bad harvests, excess supply, or a failed commercialized product with large investments. So for, Stevia First has done well at operating slowly, smartly, and efficiently, but with its limited capital this trend must continue or Stevia First could be crippled, and the stock would suffer.
With that said, investors assume that Stevia First's primary goal is to find a partner with the likes of PureCircle, Cargill, or a large food & beverage company in order to minimize financial risk. Investors also assume that given Stevia First's land, technology, and experience that it won't have any troubles in finding partners now that the company has entered the commercial phase. However, Stevia First's plan may not include the likes of PureCircle or Cargill. The company now has its own sweetener and is using just a fraction of its land for production, meaning it could make the decision to operate solo. While the company's first product is unlikely to generate $100 million in revenue, it is the first in a long line of new product releases that Stevia First has planned, which combined could create significant sales.
The bottom line is that Stevia First has a lot of options, and is well positioned to thrive in this ever-growing stevia market so long as management doesn't take any large risks and stevia as a commodity continues to surge in use.
PureCircle is the leader in all things stevia; while Stevia First presents a different investment alternative, I am in no way suggesting that it will become the next PureCircle or surpass it in global positioning.
PureCircle is undoubtedly best positioned for the global growth of stevia. As a result, it has been priced as such. The stock is expensive, but if stevia could really become 20%-30% of the sweetener industry (and reports from Credit Suisse, ABC, New York Times, CNN, Time, and The Wall Street Journal are correct), then PureCircle has much more to gain in the years ahead.
With that said, PureCircle will not be the only opportunity in this space as it grows larger. Other agriculture names will likely re-shift their focus and acquire smaller companies with the technology and acreage so that they can compete. As such, I think companies like Stevia First are well positioned for this change-- and with a market cap of $30 million, it is very possible that the last six months could be a consistent reflection of the future.
You know what to do: perform due diligence and consider the risks. But at least explore this space for potential investments. Because if stevia does gain ground on sugar, it could be one of the more significant revenue-generating markets of the next decade and large gains will be a certainty.
>>> Regime Change in Ukraine and the IMF’s Bitter “Economic Medicine”
By Prof Michel Chossudovsky
Global Research, March 24, 2014
Interim Prime Minister Arseny Yatsenyuk meets President Obama at White House, March 2014 (White House photo)
In the days following the Ukraine coup d’Etat of February 23, leading to the ousting of a duly elected president, Wall Street and the IMF–in liaison with the US Treasury and the European Commission in Brussels– had already set the stage for the outright takeover of Ukraine’s monetary system. The EuroMaidan protests leading up to “regime change” and the formation of an interim government were followed by purges within key ministries and government bodies.
The Governor of the National Bank of Ukraine (NBU) Ihor Sorkin was fired on February 25th and replaced by a new governor: Stepan Kubiv.[right]
Stepan Kubiv is a member of Parliament of the Rightist Batkivshchyna “Fatherland” faction in the Rada led by the acting Prime Minister Arseny Yatsenyuk (founded by Yulia Tymoshenko in March 1999). He previously headed Kredbank, a Ukrainian financial institution largely owned by EU capital, with some 130 branches throughout Ukraine. Ukraine Central Bank Promises Liquidity To Local Banks, With One Condition, Zero Hedge, February 27, 2014).
Kubic is no ordinary bank executive. He was one of the first field “commandants” of the EuroMaidan riots alongside Andriy Parubiy co-founder of the Neo-Nazi Social-National Party of Ukraine (subsequently renamed Svoboda) and Dimitry Yarosh, leader of the Right Sector Brown Shirts, which now has the status of a political party.
Kubiv was in the Maidan square addressing protesters on February 18, at the very moment when armed Right Sector thugs under the helm of Dmitry Yarosh were raiding the parliament building.
A few days later, upon the establishment of the interim government, Stepan Kubiv was put in charge of negotiations with Wall Street and the IMF.
The new Minister of Finance Aleksandr Shlapak [left] is a political crony of Viktor Yushchenko –a long-time protegé of the IMF who was spearheaded into the presidency following the 2004 “Colored Revolution”. Shlapak held key positions in the office of the presidency under Yushchenko as well as at the National Bank of Ukraine (NBU). In 2010, upon Yushchenko’s defeat, Aleksandr Shlapak joined a shadowy Bermuda based offshore financial outfit IMG International Ltd (IMG), holding the position of Vice President. Based in Hamilton, Bermuda, IMG specialises in “captive insurance management”, reinsurance and “risk transfer.”
Minister of Finance Aleksandr Shlapak works in close liaison with Pavlo Sheremeto, the newly appointed Minister of Economic Development and Trade, who upon his appointment called for “deregulation, fully fledged and across the board”, requiring –as demanded in previous negotiations by the IMF– the outright elimination of subsidies on fuel, energy and basic food staples.
Another key appointment is that of Ihor Shvaika [right], a member of the Neo-Nazi Svoboda Party, to the position of Minister of Agrarian Policy and Food. Headed by an avowed follower of World War II Nazi collaborator Stepan Bandera [see image below], this ministry not only oversees the agricultural sector, it also decides on issues pertaining to subsidies and the prices of basic food staples.
The new Cabinet has stated that the country is prepared for socially “painful” but necessary reforms. In December 2013, a 20 billion dollar deal with the IMF had already been contemplated alongside the controversial EU-Ukraine Association Agreement. Yanukovych decided to turn it down.
One of the requirements of the IMF was that “household subsidies for gas be reduced once again by 50%”.
“Other onerous IMF requirements included cuts to pensions, government employment, and the privatization (read: let western corporations purchase) of government assets and property. It is therefore likely that the most recent IMF deal currently in negotiation, will include once again major reductions in gas subsidies, cuts in pensions, immediate government job cuts, as well as other reductions in social spending programs in the Ukraine.” (voice of russia.com March 21, 2014)
Economic Surrender: Unconditional Acceptance of IMF Demands by Western Puppet Government
Shortly after his instatement, the interim (puppet) prime minister Arseny Yatsenyuk casually dismissed the need to negotiate with the IMF. Prior to the conduct of negotiations pertaining to a draft agreement, Yatsenyuk had already called for an unconditional acceptance of the IMF package: “We have no other choice but to accept the IMF offer”.
[Neo Nazi Svoboda Party glorify World War II Nazi Collaborator Stepan Bandera]
Yatsenyk intimated that Ukraine will “accept whatever offer the IMF and the EU made” (voice of russia.com March 21, 2014)
In surrendering to the IMF, Yatsenyuk was fully aware that the proposed reforms would brutally impoverish millions of people, including those who protested in Maidan.
The actual timeframe for the implementation of the IMF’s “shock therapy” has not yet been firmly established. In all likelihood, the regime will attempt to delay the more ruthless social impacts of the macroeconomic reforms until after the May 25 presidential elections (assuming that these elections will take place).
The text of the IMF agreement is likely to be detailed and specific, particularly with regard to State assets earmarked for privatization.
Henry Kissinger and Condoleeza Rice, according to Bloomberg are among key individuals in the US who are acting (in a non-official capacity) in tandem with the IMF, the Kiev government, in consultation with the White House and the US Congress.
The IMF Mission to Kiev
Immediately upon the instatement of the new Finance Minister and NBU governor, a request was submitted to the IMF’s Managing director. An IMF fact finding mission headed by the Director of the IMF’s European Department Rez Moghadam was rushed to Kiev:
“I am positively impressed with the authorities’ determination, sense of responsibility and commitment to an agenda of economic reform and transparency. The IMF stands ready to help the people of Ukraine and support the authorities’ economic program.” Press Release: Statement by IMF European Department Director Reza Moghadam on his Visit to Ukraine
A week later, on March 12, Christine Lagarde, met the interim Prime Minister of Ukraine Arseniy Yatsenyuk at IMF headquarters in Washington. Lagarde reaffirmed the IMF’s commitment:
“[to putting Ukraine back] on the path of sound economic governance and sustainable growth, while protecting the vulnerable in society. … We are keen to help Ukraine on its path to economic stability and prosperity.”(Press Release: Statement by IMF Managing Director Christine Lagarde on Ukraine
The above statement is wrought with hypocrisy. In practice, the IMF does not wield “sound economic governance” nor does it protect the vulnerable. It impoverishes entire populations, while providing “prosperity” to a small corrupt and subservient political and economic elite.
IMF “economic medicine” while contributing to the enrichment of a social minority, invariably triggers economic instability and mass poverty, while providing a “social safety net” to the external creditors. To sell its reform package, the IMF relies on media propaganda as well as persistent statements by “economic experts” and financial analysts which provide authority to the IMF’s macroeconomic reforms.
The unspoken objective behind IMF interventionism is to destabilize sovereign governments and literally break up entire national economies. This is achieved through the manipulation of key macroeconomic policy instruments as well as the outright rigging of financial markets, including the foreign exchange market.
To reach its unspoken goals, the IMF-World Bank –often in consultation with the US Treasury and the State Department–, will exert control over key appointments including the Minister of Finance, the Central Bank governor as well as senior officials in charge of the country’s privatization program. These key appointments will require the (unofficial) approval of the “Washington Consensus” prior to the conduct of negotiations pertaining to a multibillion IMF bailout agreement.
Beneath the rhetoric, in the real World of money and credit, the IMF has several related operational objectives:
1) to facilitate the collection of debt servicing obligations, while ensuring that the country remains indebted and under the control of its external creditors.
2) to exert on behalf of the country’s external creditors full control over the country’s monetary policy, its fiscal and budgetary structures,
3) to revamp social programs, labor laws, minimum wage legislation, in accordance with the interests of Western capital
4) to deregulate foreign trade and investment policies, including financial services and intellectual property rights,
5) to implement the privatization of key sectors of the economy through the sale of public assets to foreign corporations.
6) to facilitate the takeover by foreign capital (including mergers and acquisitions) of selected privately owned Ukrainian corporations.
7) to ensure the deregulation of the foreign exchange market.
originalWhile the privatization program ensures the transfer of State assets into the hands of foreign investors, the IMF program also includes provisions geared towards the destabilization of the country’s privately owned business conglomerates. A concurrent “break up” plan entitled “spin-off” as well as a “bankruptcy program” are often implemented with a view to triggering the liquidation, closing down or restructuring of a large number of nationally owned private and public enterprises.
The “spin off” procedure –which was imposed on South Korea under the December 1997 IMF bailout agreement– required the break up of several of Korea’s powerful chaebols (business conglomerates) into smaller corporations, many of which were then taken over by US, EU and Japanese capital.. Sizeable banking interests as well highly profitable components of Korea’s high tech industrial base were transferred or sold off at rock bottom prices to Western capital. (Michel Chossudovsky, The Globalization of Poverty and the New World Order, Global Research, Montreal, 2003, Chapter 22).
These staged bankruptcy programs ultimately seek to destroy national capitalism. In the case of Ukraine, they would selectively target the business interests of the oligarchs, opening the door for the takeover of a sizeable portion of Ukraine’s private sector by EU and US corporations. The conditionalities contained in the IMF agreement would be coordinated with those contained in the controversial EU-Ukraine Association agreement, which the Yanukovych government refused to sign.
Ukraine’s Spiraling External Debt
Ukraine’s external debt is of the order of $140 billion.
In consultations with the US Treasury and the EU, the IMF aid package is to be of the order of 15 billion dollars. Ukraine’s outstanding short-term debt is of the order of $65 billion, more than four times the amount promised by the IMF.
The Central Bank’s foreign currency reserves have literally dried up. In February, according to the NUB, Ukraine’s foreign-currency reserves were of the order of a meagre US$13.7 billion, its Special Drawing Rights with the IMF were of the order of US$16.1 million, its gold reserves US$1.81 billion. There were unconfirmed reports that Ukraine’s gold had been confiscated and airlifted to New York, for “safe-keeping” under the custody of the New York Federal Reserve Bank.
Under the bailout, the IMF –acting on behalf of Ukraine’s US and EU creditors– lends money to Ukraine which is already earmarked for debt repayment. The money is transferred to the creditors. The loan is “fictitious money”. Not one dollar of this money will enter Ukraine.
The package is not intended to support economic growth. Quite the opposite: Its main purpose is to collect the outstanding short term debt, while precipitating the destabilization of Ukraine’s economy and financial system.
The fundamental principle of usury is that the creditor comes to the rescue of the debtor: “I cannot pay my debts, No problem my son, I will lend you the money and with the money I lend you, you will pay me back”.
The rescue rope thrown to Kiev by the IMF and the European Union is in reality a ball and chain. Ukraine’s external debt, as documented by the World Bank, increased tenfold in ten years and exceeds 135 billion dollars. In interests alone, Ukraine must pay about 4.5 billion dollars a year. The new loans will only serve to increase the external debt thus obliging Kiev to “liberalize” its economy even more, by selling to corporations what remains to be privatized. Ukraine, IMF “Shock Treatment” and Economic Warfare By Manlio Dinucci, Global Research, March 21, 2014
Under the IMF loan agreement, the money will not enter the country, It will be used to trigger the repayment of outstanding debt servicing obligations to EU and US creditors. In this regard, according to the Bank for International Settlements (BIS)”European banks have more than $23 billion in outstanding loans in Ukraine.” Ukraine Facing Financial Instability But IMF May Help Soon – Spiegel Online, February 28, 2014
What are the “benefits” of an IMF package to Ukraine?
According to IMF’s managing director Christine Lagarde the bailout is intended to address the issue of poverty and social inequality. In actuality what it does is to increase the levels of indebtedness, while essentially handing over the reins of macro-economic reform and monetary policy to the Bretton Woods Institutions, acting on behalf of Wall Street.
The bailout agreement will include the imposition of drastic austerity measures which in all likelihood will trigger further social chaos and economic dislocation. It’s called “policy based lending”, namely the granting of money earmarked to reimburse the creditors, in exchange for the IMF’s “bitter economic medicine” in the form of a menu of neoliberal policy reforms. “Short-term pain for long term gain” is the motto of the Washington based Bretton Woods institutions.
Loan “conditionalities” will be imposed –including drastic austerity measures– -which will serve to impoverish the Ukrainian population beyond bounds in a country which has been under IMF ministrations for more than 20 years. While the Maidan movement was manipulated, tens of thousands of people protested they wanted a new life, because their standard of living had collapsed as a result of the neoliberal policies applied by successive governments, including that of president Yanukovych. Little did they realize that the protest movement supported by Wall Street, the US State Department and the National Endowment for Democracy (NED) was meant to usher in a new phase of economic and social destruction.
History of IMF Ministrations in Ukraine
In 1994 under the presidency of Leonid Kuchma, an IMF package was imposed on Ukraine. Viktor Yushchenko –who later became president following the 2004 Colored Revolution– had been appointed head of the newly-formed National Bank of Ukraine (NBU). Yushchenko was praised by the Western financial media as a “daring reformer”; he was among the main architects of the IMF’s 1994 reforms which served to destabilize Ukraine’s national economy. When he ran in the 2004 elections against Yanukovych, he was supported by various foundations including the National Endowment for Democracy (NED). He was Wall Street’s preferred candidate.
Ukraines’ 1994 IMF package was finalized behind closed doors at the Madrid 50 years anniversary Summit of the Bretton Woods institutions. It required the Ukrainian government to abandon State controls over the exchange rate leading to an massive collapse of the currency. Yushchenko played a key role in negotiating and implementing the 1994 agreement as well as creating a new Ukrainian national currency, which resulted in a dramatic plunge in real wages:.
Yushchenko as Head of the Central Bank was responsible for deregulating the national currency under the October 1994 “shock treatment”:
?The price of bread increased overnight by 300 percent,
?electricity prices by 600 percent,
?public transportation by 900 percent.
?the standard of living tumbled
According to the Ukrainian State Statistics Committee, quoted by the IMF, real wages in 1998 had fallen by more than 75 percent in relation to their 1991 level.(http://www.imf.org/external/pubs/ft /scr/2003/cr03174.pdf )
Ironically, the IMF sponsored program was intended to alleviate inflationary pressures: it consisted in imposing “dollarised” prices on an impoverished population with earnings below ten dollars a month.
Combined with the abrupt hikes in fuel and energy prices, the lifting of subsidies and the freeze on credit contributed to destroying industry (both public and private) and undermining Ukraine’s breadbasket economy.
In November 1994, World Bank negotiators were sent in to examine the overhaul of Ukraine’s agriculture. With trade liberalization (which was part of the economic package), US grain surpluses and “food aid” were dumped on the domestic market, contributing to destabilizing one of the World’s largest and most productive wheat economies, (e.g. comparable to that of the American Mid West). Michel Chossudovsky IMF Sponsored “Democracy” in The Ukraine, Global Research, November 28, 2004, emphasis added)
The IMF-World Bank had destroyed Ukraine’s ‘bread basket”.
By 1998, the deregulation of the grain market, the hikes in the price of fuel and the liberalisation of trade resulted in a decline in the production of grain by 45 percent in relation to its 1986-90 level. The collapse in livestock production, poultry and dairy products was even more dramatic. (See http://www.imf.org/external/pubs/ft/scr/2003/cr03174.pdf). The cumulative decline in GDP resulting from the IMF sponsored reforms was in excess of 60 percent from 1992 to 1995.
The World Bank: Fake Poverty Alleviation
The World Bank has recently acknowledged that Ukraine is a poor country. (World Bank, Ukraine Overview, Washington DC, updated February 17, 2014):
“Evidence shows Ukraine is facing a health crisis, and the country needs to make urgent and extensive measures to its health system to reverse the progressive deterioration of citizens’ health. Crude adult death rates in Ukraine are higher than its immediate neighbors, Moldova and Belarus, and among the highest not only in Europe, but also in the world.”
What the report fails to mention is that the Bretton Woods institutions –through a process of economic engineering– played a central role in precipitating the post-Soviet collapse of the Ukrainian economy. The dramatic breakdown of Ukraine’s social programs bears the fingerprints of the IMF-World Bank austerity measures which included the deliberate underfunding and dismantling of the Soviet era health care system.
With regard to agriculture, the World Bank points to Ukraine’s “tremendous agricultural potential” while failing to acknowledge that the Ukraine bread-basket was destroyed as part of a US-IMF-World Bank package. According to the World Bank: “This potential has not been fully exploited due to depressed farm incomes and a lack of modernization within the sector.”
“Depressed farm incomes” are not “the cause” they are the “consequence” of the IMF-World Bank Structural Adjustment Program. In 1994, farm incomes had declined by the order of 80% in relation to 1991, following the October 1994 IMF program engineered by then NUB governor Viktor Yushchenko. Immediately following the 1994 IMF reform package, the World Bank implemented (in 1995) a private sector “seed project” based on “the liberalization of seed pricing, marketing, and trade”. The prices of farm inputs increased dramatically leading to a string of agricultural bankruptcies. Projects : Agricultural Seed Development Project | The World Bank, Washington DC, 1995.
The IMF’s 2014 “Shock and Awe” Economic Bailout
While the conditions prevailing in Ukraine today are markedly different to those applied in the 1990s, it should be understood that the imposition of a new wave of macro-economic reforms (under strict IMF policy conditionalities) will serve to impoverish a population which has already been impoverished.
In other words, the IMF’s 2014 “Shock and Awe” constitutes the “final blow” in a sequence of IMF interventions spreading over a period of more than 20 years, which have contributed to destabilizing the national economy and impoverishing Ukraine’s population. We are not dealing with a Greece Model Austerity Package as some analysts have suggested. The reforms slated for Ukraine will be far more devastating.
Preliminary information suggests that IMF bailout will provide an advance of $2-billion in the form of a grant to be followed by a subsequent loan of $11 billion. The European Investment Bank (EIB) will provide another 2 billion, for a total package of around $15 billion. (See Voice of Russia, March 21, 2014)
Drastic Austerity Measures
The Kiev government has announced that the IMF requires a 20% cut in Ukraine`s national budget, implying drastic cuts in social programs, coupled with reductions in the wages of public employees, privatisation and the sale of state assets. The IMF has also called for a “phase out” of energy subsidies, and the deregulation of the foreign exchange markets. With unmanageable debts, the IMF will also impose the sell off and privatisation of major public assets as well as the takeover of the national banking sector.
The new government pressured by the IMF and World Bank have already announced that old aged pensions are to be curtailed by 50 %. In a timely February 21 release, the World Bank had set the guidelines for old age pension reform in the countries of “Emerging Europe and Central Asia” including Ukraine. In an utterly twisted logic, “Protecting the elderly” is carried out by slashing their pension benefits, according to the World Bank. (World Bank, Significant Pension Reforms Urged in Emerging Europe and Central Asia, Washington Dc, February 21, 2014)
Given the absence of a real government in Kiev, Ukraine’s political handlers in the Ministry of Finance and the NUB will obey the diktats of Wall Street: The IMF structural adjustment loan agreement for Ukraine will be devastating in its social and economic impacts.
Elimination of Subsidies
Pointing to “market distorted energy subsidies”, price deregulation has been a longstanding demand from both IMF-World Bank. The price of energy had been kept relatively low during the Yanukovych government largely as a result of the bilateral agreement with Russia, which provided Ukraine with low cost gas in exchange for Naval base lease in Sebastopol. That agreement is now null and void. It is also worth noting that the government of Crimea has announced that it would take over ownership of all Ukrainian state companies in Crimea, including the Black Sea natural gas fields.
The Kiev interim government has intimated that Ukraine’s retail gas prices would have to rise by 40% “as part of economic reforms needed to unlock loans from the International Monetary Fund”. This announcement fails to address the mechanics of full fledged deregulation which under present circumstances could lead to increases in energy prices in excess of 100 percent.
It is worth recalling, in this regard, that Peru in August 1991 had set the stage for “shock treatment” increases in energy prices when gasoline prices in Lima shot up overnight by 2978% (a 30 fold increase). In 1994 as part of the agreement between the IMF and Leonid Kuchma, the price of electricity flew up over night by 900 percent.
“Enhanced Exchange Rate Flexibility”
One of the central components of IMF intervention is the deregulation of the foreign exchange market. In addition to massive expenditure cuts, the IMF program requires “enhanced exchange rate flexibility” namely the removal of all foreign exchange controls. Ukraine: Staff Report for the 2012 Article IV Consultation, See also http://www.imf.org/external/pubs/ft/scr/2012/cr12315.pdf.
Since the outset of the Maidan protest movement in December 2013, foreign exchange controls were instated with a view to supporting the hyrvnia and stemming the massive outflow of capital.
The IMF sponsored bailout will literally ransack the foreign currency reserves held by the National Bank of Ukraine (NBU). Enhanced exchange rate flexibility under IMF guidance has been endorsed by the new NBU governor Stepan Kubic. Without virtually no forex reserves, exchange rate flexibility is financial suicide: it opens the door to speculative short-selling transactions (modelled on the 1997 Asian crisis) directed against the Ukraine’s currency, the hrynia.
Institutional speculators, which include major Wall Street and European Banks as well as hedge funds have already positioned themselves. Manipulation in the forex markets is undertaken through derivative trade. Major financial institutions will have detailed inside information with regard to Central Bank policies which will enable them to rig the forex market.
Under a flexible exchange rate system, the Central Bank does not impose restrictions on forex transactions. The Central Bank can however decide –under advice from the IMF– to counter the speculative onslaught in the forex market, with a view to maintaining the parity of the Ukrainian hryvnia. Without the use of exchange controls, this line of action requires Ukraine’s central bank (in the absence of forex reserves) to prop up an ailing currency with borrowed money, thereby contributing to exacerbating the debt crisis.
[the graph below indicates a decline of the hryvnia against the US $ of more than 20% over a six months period]
USD- UA Hryvnia Exchange Rate (120 days)
It is worth recalling in this regard that Brazil in November 1998 had received a precautionary bailout loan from the IMF of the order of 40 billion dollars. One of the conditions of the loan agreement, however, was the complete deregulation of the forex market. This loan was intended to assist the Central Banking in maintaining the parity of the Brazilian real. In practice it spearheaded Brazil into a financial crash in February 1999.
The Brazilian government had accepted the conditionalities. Marred by capital flight of the order of 400 million dollars a day, the money granted under the IMF loan –which was intended to prop up Brazil’s central banks reserves– was plundered in a matter of months. The IMF loan agreement to Brasilia enabled the institutional speculators to buy time. Most of the money under the IMF loan was appropriated in the form of speculative gains accruing to major financial institutions.
With regard to Ukraine, enhanced exchange flexibility spells disaster. Contrary to Brazil, the Central Bank has no forex reserves which would enable it to defend its currency. Where would the NBU get the borrowed forex reserves? Most of the funds under the proposed IMF-EU rescue package are already earmarked and could be used to effectively defend the hrynia against “short-selling” speculative attacks in the currency markets. The most likely scenario is that the hrynia will experience a major decline leading to significant hikes in the prices of essential commodities, including food, fuel and transportation.
Were the Central Bank able to use borrowed reserves to prop up the hrynia, this borrowed money would be swiftly reappropriated, handed over to currency speculators on a silver platter. This scenario of propping up the national currency using borrowed forex reserves (i.e. Brazil in 1998-99) would, however, contribute in the short-term to staving off an immediate collapse of the standard.
This procedure provides “extra time” to the speculators, who are busy plundering the Central Bank’s (borrowed) currency reserves. It also enables the interim government to postpone the worst impacts of the IMF’s “enhanced exchange rate flexibility” to a later date.
When the borrowed hard currency reserves of the Central Bank run out –i.e. in the immediate aftermath of the May 25 presidential elections– the value of hrynia will plunge on the forex market, which in turn will trigger a dramatic collapse in the standard of living. Coupled with the demise of bilateral economic relations with Russia pertaining to the supply of natural gas to Ukraine, energy prices are also slated to increase dramatically.
Neoliberalism and neo-Nazi ideology join hands: Repressing the Protest Movement against the IMF
With Svoboda and Right Sector political appointees in charge of national security and the armed forces, a real grassroots protest movement directed against the IMF’s deadly macroeconomic reforms, will in all likelihood be brutally repressed by the Right Sector’s “brown shirts” and the National Guard paramilitary led by Dmitri Yarosh [left image, center with the microphone], on behalf of Wall Street and the Washington consensus. In recent developments, Right Sector Dmitry Yaroch has declared his candidacy in the upcoming presidential elections. (Popular support for the Yaroch is less than 2%).
“Russia put Yarosh on an international wanted list and charged him with inciting terrorism after he urged Chechen terrorist leader Doku Umarov to launch attacks on Russia over the Ukrainian conflict. The ultra-nationalist leader has also threatened to destroy Russian pipelines on Ukrainian territory.” (RT, March 22, 2014)
Meanwhile, Ukraine’s State prosecutor who also belongs to the Neo-Nazi faction, has implemented procedures which prevent the holding of public rallies and protests directed against the interim government.
>>> From Now On, No Compromises Are Possible For Russia
March 10, 2014
By Valentin Mândrasescu, Editor of The Voice of Russia’s Reality Check. Former commodity trader, economist, journalist. Nomadic lifestyle. When not in Moscow, he can be found travelling across Eastern Europe.
When, on February 21st, Washington decided to default on the agreement signed between Ukrainian President Viktor Yanukovich and the so-called “democratic opposition,” including Neo-Nazis, it finally crossed the red line.
Washington has defaulted on all of its key agreements made with USSR/Russia during the last 30 years. Gorbachev was promised that Eastern Europe would not be taken into NATO. Country by country, it became part of NATO, and Yugoslavia was dismantled despite Russia’s objections. The US acted as the winner of the Cold War and guided its policies by the famous principle of “Vae victis!” Woe to the vanquished!
The “hawks” in Washington think they can push Russia around indefinitely, that Russia, in order to become an “accepted partner” in the West, would still try to negotiate, be diplomatic and peaceful.
Washington’s defaulting on an explicit agreement regarding Ukraine’s future and the prospect of NATO troops on the ground in Ukraine finally convinced Vladimir Putin and a big part of the Russian elite that there is no point in negotiating with the US. It means that from now on, no compromises are possible.
For America, the situation in Ukraine is a geopolitical game, another opportunity to hurt Russia’s interests. For Russia, it’s not a geopolitical game. It’s a matter of national identity, it’s an ethnic matter. Almost every Russian I know has relatives in Ukraine. Roughly a third of Russian senators and members of the government were born in Ukraine.
Dmitry Yarosh, the leader of the biggest neo-Nazi group in Ukraine, issued a statement in which he called on Russia’s most wanted Chechen terrorist, Doku Umarov, to commit acts of terrorism in Russia. “Many Ukrainians with arms in the hands” had supported Chechen militants in their fight against Russians, the statement said, but “it is time to support Ukraine now.”
What would have happened to a warlord somewhere who called on Al-Qaeda to commit acts of terrorism in the US? He would have been killed by a drone strike without international warrant or court decision. If the US does this, then other countries are entitled to act in a similar manner.
The fact that the neo-Nazi leaders and their soldiers haven’t been disarmed despite the EU-brokered agreement signed on February 21st proves that they and not the “official government” are actually in control of the situation. But the US doesn’t care about the fate of the Russians who don’t want to live in a neo-Nazi-led state. The US wants to dislodge Russia from the region, and nothing else matters.
There are rumors circulating in the expert community in Moscow – and I have strong reasons to believe they’re true – that the decision to tackle the Crimean issue was taken by Putin personally. He has full support from a number of top officials, especially from the army and the secret services, who have no assets and no business abroad that can be seized by the US. Also, in 2013, the Parliament passed a law barring Russian officials from owning assets, except real estate, outside Russia. So, the officials whose assets will be frozen by the US sanctions are criminals under Russian law anyway – and Putin might even welcome the move.
The hard-liners in the Kremlin have received a tremendous boost from the US. Now, everyone who advocates for a softer stance on Ukraine and everyone who advocates for an “agreement with the US” is looked upon as too stupid to understand that Washington won’t honor its end of the bargain or as paid by Washington to lead Russia into another agreement that will once again be broken. America has lost most if not all of its ranking sympathizers or allies in Russia because they are either actively shunned or because they have to be silent.
Putin’s ratings are at two-year highs. Even his fiercest critics understand that his involvement in Ukraine has tremendous popular support. He will no longer have to cater to the needs of the pro-Western community. He is now supported not only by his usual conservative electorate, but also by the communists and nationalists who like his decisive actions and his disregard for America’s objections.
From the economic point of view, everyone should get ready for tough actions from Moscow. Sergei Glazyev, the most hardline of Putin’s advisors, sketched the retaliation strategy: Drop the dollar, sell US Treasuries, encourage Russian companies to default on their dollar-denominated debts, and create an alternative currency system (reference currency) with the BRICS and hydrocarbon producers like Venezuela and Iran.
Of course, some “anonymous sources” told RIA Novosti and Reuters that Glazyev was speaking “as an academic” and not in his official capacity, but it must be pointed out that those sources didn’t dare identify themselves. On the other hand, Glaziev’s projects more often than not become the cornerstone of Putin’s external policy, including the Customs Union and the Eurasian Union.
The Western media ignore another key supporter of hardline economic measures, Putin’s ally and trusted friend, Rosneft president Igor Sechin. At last October’s World Energy Congress in Daegu, South Korea, Sechin suggested that it was “advisable to create an international stock-exchange for the participating countries, where transactions could be registered with the use of regional currencies.”
Until February 21st, Moscow was content with the slow expansion of its economic sphere of influence. Now, the hard-liners have the possibility to go all in and pursue their radical projects and strategies.
Here, in Moscow, almost everyone is certain that we’ll see a rerun of the “Georgian war” and that Crimea will be attacked by Ukrainian army at some point before March 16th. If you’re a trader, sitting on the fence for a week or putting on some hedges may be a very good idea. By Valentin Mândrasescu, exclusive for Testosterone Pit.
The US offered Ukraine $1 billion in aid, the EU $15 billion. The IMF is working on its aid package. All to shift losses from lenders, bondholders, hedge funds... to taxpayers in other countries. But it won’t rescue the economy. Because it’s a cesspool of corruption and plundering oligarchs. Read... Aid for the Ukraine “Will Be Stolen” – Former Ukrainian Minister of Economy
>>> Emerging Market Currency Devaluation Will Mark End Of Tapering
Feb. 17, 2014
About: VWO, Includes: GDX, GLD
The interesting news these days is all about currency devaluation in the emerging markets. Due to the tapering of the Federal Reserve, we now have an unintended consequence. All of the cheap money supplied by the Federal Reserve that went to the emerging markets is now coming home. Some of the emerging market countries are already feeling this pressure of currency outflows. As a result, they are raising interest rates at a very fast pace which collapses their economies. Although emerging market equities have better valuations than developed market equities, we still see a monthly outflow of $12 billion out of emerging market funds (VWO). All of this money is now flowing back into U.S. bonds and more recently into precious metals.
Here is a summary of all currency devaluations of the emerging markets.
Kazakhstan devalued the currency just recently from a USD to KZT exchange rate of 153 to 185. That's a 20% devaluation in just a few days. Their foreign currency reserves are at record lows of $24.5 billion. Their reserves have been dropping since 2011. This is why Kazakhstan is importing a lot of gold these days to increase its reserves.
Turkey has kind of the same problem as Kazakhstan. Turkey also kept importing gold to raise their reserves and protect itself from currency devaluation. The lira has been devalued by more than 50% since the start of the crisis in 2008.
Venezuela devalued its Bolivar another 30% from 4.3 to 6.3 against the U.S. dollar.
Argentina devalued its peso already since 2009 and it is getting to a critical inflection point where we will see defaults and hyperinflation. The reason for all of this is again a low amount of foreign currency reserves.
Nigeria will be the next to devalue its currency in 2015, as the country's foreign currency reserves are at record lows.
Sudan has already devalued its currency by more than 50% against the U.S. dollar.
Other than these extremes, we see trouble in some other emerging market currencies of countries like Russia. You can easily see on this chart below that since the start of QE in 2009, the ruble strengthened. But since the taper talk in 2013, the ruble started to weaken considerably.
We see exactly the same trend in the Brazilian real.
And in the Indian rupee.
The conclusion is that ever since the Federal Reserve started tapering, all of these emerging market currencies started to witness outflows. There are exceptions like Vietnam which has stronger fundamentals, but the overall trend is down. As a result, these countries are raising interest rates 2 or 3% overnight to curb inflation. But this on itself will crash the economies of these emerging markets. The emerging markets that have the least foreign exchange reserves are particularly vulnerable and should be avoided by investors. Especially when Janet Yellen stays on her course of tapering. But I expect an abrupt end to tapering when the emerging markets continue their decline. Gerald Celente reports that in January 2014 alone, we already saw $3 trillion of global assets being wiped out, and this cannot continue. We will see some kind of stimulus in the middle of this year, and that will be very beneficial to one particular asset: gold.
Inflation in these emerging markets has spurred this particular rising trend in gold. If these people all had gold in their possession, they would benefit greatly from this. They wouldn't be affected by this devaluation. This is why we have seen a surge in the gold price since the end of December 2013. I believe this trend will continue as emerging market countries will need to keep buying gold to protect themselves against currency devaluation. Investors can benefit from this trend by buying gold (GLD) or gold mining shares like the Market Vectors Gold Miners ETF (GDX).
>>> LyondellBasell Industries N.V., together with its subsidiaries, manufacturers and sells chemicals and polymers; refines crude oil; produces gasoline blending components; and develops and licenses technologies for the production of polymers. The company?s Olefins and Polyolefins segment offers olefins, including ethylene, propylene, and butadiene; polyolefins that comprise polypropylene (PP), high density polyethylene, low density polyethylene, and linear low density polyethylene; aromatics, which include benzene; and specialty polyolefins, such as catalloy process resins, as well as PP compounds and polybutene-1 resins. Its Intermediates and Derivatives segment provides propylene oxide (PO); PO co-products, including styrene monomers, tertiary butyl alcohol, and its derivative isobutylene; PO derivatives, which consists of propylene glycol, propylene glycol ethers, and butanediol; acetyls, such as methanol, acetic acid, and vinyl acetate monomers; and ethylene derivatives, including ethylene oxide, ethylene glycol, ethylene glycol ethers, and ethanol. This segment also provides gasoline blending components, such as methyl tertiary butyl ether and ethyl tertiary butyl ether. The company?s Refining segment offers gasoline and components, ultra low sulfur diesel, jet fuel, lube oils, and alkylate. Its Technology segment develops and licenses chemical, polyolefin, and other process technologies, as well as associated engineering and other services. This segment also develops, manufactures, and sells polyolefin catalysts. LyondellBasell Industries N.V. operates in the Americas, Europe, Asia, and internationally. The company was founded in 2005 and is based in Rotterdam, the Netherlands. <<<
Vipshop -- >>> China's Online Shoppers Loving Vipshop 'Flash Sales'
By MARILYN MUCH
INVESTOR'S BUSINESS DAILY
When it comes to feeding the consumer appetite for bargains, China's Vipshop Holdings follows a tried and true recipe that's helped nurture a healthy growth spurt.
Vipshop (VIPS), which started in 2008 and went public in March 2012, is somewhat of a rare breed among retail websites. It sells quality branded apparel, accessories, home goods and other lifestyle products at a 30% to 70% discount to the original retail price using a "flash sales" model. Every morning at 10 Beijing time, it launches new flash sales on a finite quantity of products or services online for a limited time.
To provide shoppers with a greater opportunity to buy featured discounted products, each customer is limited to purchasing two pieces of the same item and each shopping cart can hold only 20 items at one time, except for food products.
As with other popular flash-sale sites, which sell everything from high fashion to hotel rooms, the idea is to create an impulse-driven shopping experience while helping to move excess inventory sourced from a variety of vendors.
As of the end of 2012, Vipshop had an impressive lineup of goods with exclusive rights to sell selective products from more than 700 brands.
Vipshop features products from more than 5,800 brands, including international labels such as such as Nike (NKE), Disney (DIS), Hanesbrands (HBI) and Lee (owned by VF Corp. (VFC); and domestic brands like Hstyle. Its top three selling brands are Adidas, Nike and Kappa, a domestic sporting goods brand.
Vipshop's approach has played well with customers. In 2012, sales more than tripled to $692 million. It ended that year with close to 27 million registered users.
It has also scored a big hit with investors. Vipshop's stock price has rocketed nearly 450% over the past 12 months to around 100.
Vipshop has been profitable the past five quarters. It earned 26 cents per American Depositary Share (ADS) in the most recent third quarter, up from one cent a year earlier. Sales rocketed 146% to $383.7 million as it saw a 132% rise in active customers to 4 million and a 116% rise in total orders to 11.7 million.
Analysts polled by Thomson Reuters expect full-year 2013 earnings to reach $1.04 per ADS, up from a 4-cent loss in 2012. They see a 107% surge in 2014 and a 59% rise in 2015.
China-based UBS analyst Erica Poon Werkun forecast a 62% revenue compound annual growth rate from 2012 to 2017, driven mainly by growth on active customers, in her January initiation note on Vipshop, which she rates a buy.
Australia -- >>> Here's where the highest yields are hiding
If you aren't looking beyond US borders, then you're missing out on some of the world's most productive securities.
By Michael Vodicka
I think it's one of the market's biggest missed opportunities. Every day, millions of U.S. investors are missing out on the world's highest-yielding securities.
That's because the vast majority of the world's highest-yields aren't found in the United States.
As the chief strategist of High-Yield International, my job is to scour the globe for the world's highest yielding stocks, funds and ETFs. And at last count, my research shows that over 79% of the world's highest-yielding stocks are based in international markets. (You can read more of my research about these stocks here.)
That includes companies like global shipping giant Navios Maritime Partners (NMM -0.59%), which yields 9.3%. And Bermuda-based outfits like SeaDrill (SDRL -0.31%), which pays an impressive 7.9%. If you're like most people, then you'll probably never take advantage of foreign stocks like these.
That's a shame, because the average stock in the United Kingdom yields 3.8%. Brazil's average yield is 4.4%, Australia yields 4.3% and New Zealand pays 4.5%.
By contrast, stocks here at home yield a paltry 2%, on average.
Most U.S. investors dismiss the idea of investing abroad. They tend to think other countries are "riskier" than the United States.
But that's not always the case, especially with one special country I'll tell you about in a moment, where average yields are double those found in the United States.
A safer way to invest
In the past couple of years, America's total debt load has topped $17 trillion -- and that burden is projected to grow even larger, reaching a total of $25 trillion by 2020.
Like a taxi meter spinning faster and faster, we are slipping $1.9 billion deeper into the hole every day -- at a rate of $80 million per hour.
Our credit rating was even knocked down from its golden "AAA" status by Standard & Poor's.
Now compare that to a country like Australia. From the mid 1990s through 2007, the Australian government steadily paid down its debts, reducing the nation's debt-to-GDP ratio to less than 10%.
Although Australia took steps to help stimulate its economy amid the financial crisis, the government kept spending under control. As a result, Australia's public debt-to-GDP ratio is still just 29% -- several times lower than the United States' debt ratio.
But what's more, amid all the pain caused by the Great Recession, Australia has truly lived up to its nickname the "Lucky Country," avoiding recession entirely and emerging from the global downturn largely unscathed.
Throughout the entire economic slowdown, Australia's GDP only experienced a single quarter of negative economic growth, and that was at the height of the financial crisis in 2009. The country's growth quickly re-accelerated to a 3% clip in 2010.
That's part of the reason Australia is one of only eight countries that still sports a perfect "AAA" credit rating by all the major ratings agencies.
Yields that are 2X higher than U.S. stocks
But Australia is much more than just a safe place for your money. The country also offers some of the highest yields on the planet.
The average dividend yield of all stocks on the Australian Stock Exchange stands at 4.3%, more than double the 2% average yield offered by stocks in the S&P 500.
Take Telstra (TLSYY +0.30%), Australia's equivalent to AT&T (T -1.34%). The telecom offers phone and Internet service around the country.
You'd expect a telecom to pay a substantial dividend. AT&T pays a yield of 5.2%, making it one of the S&P's highest-yielding stocks.
But Telstra pays a yield of roughly 5.8%.
It's the same story with APA Group (APAJF 0.00%). This company is the largest natural gas infrastructure firm in Australia, owning more than 10,000 kilometers of natural gas pipelines, two major natural gas storage facilities and two power plants.
If that business sounds familiar, it's basically the same as a master-limited partnership (MLP) here in the United States. MLPs are known for their high-yields. The largest U.S.-based MLP, Enterprise Products Partners (EPD +0.37%), yields 4.2%.
APA Group? It pays more than 6.6%, working in basically the same business.
But Australia is by no means the only country that offers fat dividend yields like these. The fact of the matter is there is simply a much stronger dividend culture abroad. Individual investors play a larger role in those markets, and they have always demanded more dividends.
Don't get me wrong, I don't recommend putting your entire portfolio into international high-yielders. But I think most U.S. investors are unaware of what they're missing. Put simply, if you want to earn the most income possible, then you have to start considering international income stocks.