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  • Buy Westpac: Australian Bank Offers Sustainable 6% Dividend Yield [View article]
    Dividend withholding tax is not applied by the Australian Taxation Office (ATO) on fully franked dividends i.e those where the company has already paid company tax of 30%.

    On unfranked dividends i.e where company tax hasn't been paid, withholding tax is charged at 30%. However, there is a tax agreement with the U.S which lowers this rate to 15% for U.S investors.

    Westpac pays fully franked dividends so no withholding tax is payable by foreign investors.

    The ATO website and foreign tax schedule is available here http://bit.ly/Mupxbe
    Aug 8, 2012. 08:37 AM | 1 Like Like |Link to Comment
  • Telefonica: Cheap For A Reason (Equity) [View article]
    adiviono thank you for the comment and the video. I will certainly be having a look. I have recently submitted for publication a follow-up to this piece which is a comparative valuation of TEF to its peers, to make up for the lack of a ratio based valuation in this article, which may offer some additional insight. Although I am not really a big fan of determining if a company is a buy or a sell based on fundamental valuation ratios alone.
    Aug 8, 2012. 02:50 AM | Likes Like |Link to Comment
  • Colombia: Poised To Reach Its Economic Potential [View article]
    Rich thank you for reading. I am unsure what you mean by a new story or bottom floor? I am also a little uncertain as to the point your raising or how it ties in with the article. However, I am more than happy to answer the question if you can clarify it?

    Thanks,

    CV
    Aug 8, 2012. 02:36 AM | Likes Like |Link to Comment
  • Ecopetrol's Second Quarter Results Indicate A Disappointing Year Ahead For Investors [View article]
    I am hoping that the issues facing Ecopetrol are resolved in the medium to long-term and it has been my preferred choice for exposure to Latam's oil boom. But for these issues to be resolved it will be necessary for management to develop and implement a plan to do so. It is on that basis that I continue to hold EC.

    The issues concerning Colombia's internal security situation are far more complex and it will be many years before they are satisfactorily resolved. The situation is quite fluid and changes weekly. Many within Colombia thought they were a spent force particularly with the death of Alfonso Cano in November of last year. Much of their strength is derived from the general insecurity, poverty , lack of the rule of law and failed government institutions throughout much of Colombia.
    Aug 7, 2012. 03:24 PM | Likes Like |Link to Comment
  • Telefonica: Cheap For A Reason (Equity) [View article]
    Nationalism is just an ever present risk of investing in Latam. It is also on the rise in Colombia but tends to have different outlets to other Latam countries.

    I am also currently up a profile on VIV and investigating further the mining sector and recent developments in Peru for future articles.

    With regard to Petrobras the manner in which the current government is using the company as a national policy tool has always been a risk, but even I misunderstood how deep that would go.

    I also believe that the deeper Brazil's problems the more protectionist and interventionist the government will become particularly with the lead up to the FIFA World Cup and the Olympics creating considerable pressure for the government to ensure the success of those games and present a favorable domestic image for the world media that will be present.
    Aug 6, 2012. 11:21 PM | Likes Like |Link to Comment
  • Telefonica: Cheap For A Reason (Equity) [View article]
    My pleasure, one of my projects that I am working on at the moment is an update on the Argentine telco sector as a follow-up to my earlier article.
    Aug 6, 2012. 08:32 PM | Likes Like |Link to Comment
  • Telefonica: Cheap For A Reason (Equity) [View article]
    William thank you for raising that issue. Regulatory change in Latam is a key risk being faced by telcos operating in Latam particularly in Brazil, Argentina and Peru. Overall I think the risk of nationalism is low because it takes a distinct level of expertise to effectively run a telco.

    The foreign ownership issue is quite interesting because it depends on the company and the country. In Colombia Telmex which is AMX is resented but the other foreign operators including TEF are not. While in Argentina there has been ongoing resentment towards TEF and also among some people to get TI out of TEO.

    At the moment with Peru and the ongoing issue over ground water pollution and the gold and copper mining protests there has been a tremendous groundswell against all foreign ownership. It is also not unfounded, the environmental record of foreign mining companies operating in Peru such as NEM, ABX and Xstrata to name a few has been abhorrent. This issue is providing fertile recruitment ground for a resurgent Shining Path and has also been a factor in the surge in coca growing in Peru. Overall I wouldn't be investing in any foreign mining companies that operate in Peru, but that is another story.

    Also the level of investment in infrastructure required in Latam is tremendous and if the governments start shutting out or scaring off private business then the money just won't be there to invest in infrastructure. If anything at this stage both Peru and Argentina are placing pressure on the telcos to make their services cheaper, more accessible and reliable along with greater infrastructure development.

    I took a close look at the Argentine telco sector and the risk of nationalization earlier this year http://seekingalpha.co... where I concluded nationalization more than likely won't occur. But the government will use regulatory and political pressure to drive the outcome they are seeking.
    Aug 6, 2012. 07:11 PM | Likes Like |Link to Comment
  • Ecopetrol's Second Quarter Results Indicate A Disappointing Year Ahead For Investors [View article]
    dgalvan thank you for the feedback. It is always good to get that feedback from a critic of my work and someone such as yourself who has a strong knowledge of Colombian equities as they are still relatively new to me.

    The inspiration for the article came from your comments regarding EC's 2Q performance that you made on Ecopetrol & Petrobras Barometers of . . . http://seekingalpha.co....

    Thank you for providing the information and insight that you did. While I quite like EC and believe that the company has tremendous potential, hence my positive view, there comes a time when you need to state where the company is at and take a realistic view of whether it will continue to provide value for investors. At this time until management step up and provide a clear strategy of how they will deal with the risks facing the company it is difficult to take a positive view.

    Since publishing the article it is also appearing more likely that additional shares from the government's holding will be offered to the market in 2013, with a bill now before Congress to approve the sale.

    I am working on CIB at the moment and again that it is another favorite company. But it has also reached the point where management can no longer rely upon 'catch-up growth' and need to have a clear executable growth strategy in place in order to continue delivering investors value. I am also quite keen to take a closer look at Davivienda, EEB and Exito.
    Aug 6, 2012. 06:53 PM | Likes Like |Link to Comment
  • Global Headwinds Bite Deeper In Latin America As Colombia Orders First Rate Cut In 2 Years [View article]
    Yellow thank you for the feedback. One of my favorite Colombian stocks would be EC though I feel that they aren't getting serious about dealing with their risks and 2012 is going to be a disappointing investors in EC http://seekingalpha.co... . Over a 10 year time frame the biggest issue with EC is their low proven reserves, which at the current rate of production will only last for 6 years.

    I also quite like Bancolombia (CIB) which is also available as a NYSE listed ADR and I am working on a review of the bank's 2Q 2012 results. I also like a number of locally listed stocks on the Bolsa de Valores de Colombia; including EEB (largest electricity utility in Colombia), Exito (largest supermarket/department store chain owned by the French company Casino) and Davivienda bank. There was talk of EEB and Davivienda issuing ADRs on the NYSE earlier this year but it seems that they have decided to not proceed.
    Aug 5, 2012. 06:46 PM | Likes Like |Link to Comment
  • Global Headwinds Bite Deeper In Latin America As Colombia Orders First Rate Cut In 2 Years [View article]
    Neal thank you for the feedback.
    Aug 5, 2012. 06:37 PM | Likes Like |Link to Comment
  • Global Headwinds Bite Deeper In Latin America As Colombia Orders First Rate Cut In 2 Years [View article]
    Valuematters thank you for the insight into Argentina. I have been discussing what has been happening in Argentina with some other readers who live in Argentina. But your comments add a new level of depth to explaining the issues being faced by foreign companies in the country. The situation at the moment in Argentina intrigues me because the population seems strongly polarized they are either pro-CFK or anti CFK and her policies and there appears to be no middle ground.
    Aug 5, 2012. 06:37 PM | Likes Like |Link to Comment
  • Telefonica: Cheap For A Reason (Equity) [View article]
    Veritas I think that is a very good summary of TEF's position. I am in the process of working with Mike to put together a valuation comparison against its peers which I hope will give some more guidance for readers.
    Aug 5, 2012. 06:31 PM | Likes Like |Link to Comment
  • Global Headwinds Bite Deeper In Latin America As Colombia Orders First Rate Cut In 2 Years [View article]
    Some great points and I wholeheartedly agree.

    Argentina is a unique case in South America and the protectionism and interventionist policies of the government mixed in with an unstable economic environment will always push many investors away. Not because there are no opportunities but because it is a difficult and complex business environment to navigate. Which is in stark contrast to Colombia or even Peru (which is more heavily regulated) which have tried to make it as simple as possible for foreign companies and investors to do business. Brazil to a point will always succeed to a degree as you have pointed out because of size, the level of development achieved and the amount of resources it has access to. The reason for manufacturing in Brazil is because of the quotas and tariffs imposed on imports and the concessions given to local industry, which make it more economical to produce locally particularly if you want to sell your products in Brazil.

    Overall to date the Colombian government's policies as you have pointed out have been very good and the framework established is a solid framework. But I think they have reached the point where they need to start engineering better policies to build the domestic economy, which to some extent will affect the inflow of FDI.

    The positive for Colombia is that it can look at different South American countries and see what model they have used to develop and the pros and cons of that model. I would like to see the government take a more regulated approach particularly with oil and mining and strengthen the legal and regulatory framework. But if you know anything about the Colombian legal system and way of government that will never happen.

    Another factor is that the majority of state institutions are particularly weak and they are solely focused on foreign investment as a means of economic growth. This is great for foreign companies seeking cheap labor, access to resources and a liberal business environment but not so good for Colombia, its long-term growth or the population of Colombia except for those who act as the gate keepers to foreign investment, business and government in Colombia.

    I am hoping to see Colombia perhaps take a unique approach in Latin America, where they seek out and market their strengths to continue attracting capital and investment while seeking to minimize the damage locally and maximize the benefits to Colombia and its people. This could be done using a strong transparent and even handed economic, legal and regulatory framework. With policies enacted to maximize the retention of profits and liberalize the domestic business environment.

    I can get a grant from the government of Medellin/Antioquia to start a small business but it will only ever a micro-business such as juice stand, not anything that can grow and employ people or pay significant wages injecting cash in to the local economy. Plus there level of discretionary consumption in Colombia is too low to support anything than micro-businesses at this time.

    I would also be very interested in getting your view on Argentina at the moment and how CFK's policies are affecting your business there.
    Aug 4, 2012. 09:07 PM | Likes Like |Link to Comment
  • Petrobras' (PBR) first quarterly loss in 13 years has more to do with the real's depreciation than recurrent factors, CEO Maria das Gracas Foster says. The company lost 1.35B reais ($666M) vs. an expected 2.94B-real profit, and the need for international financing means heavy exposure to the dollar. Production gains of 1.5% in the past year (to 2.62M bpd) marked the slowest rate since 2007. (Beyondbrics: It's not just the FX[View news story]
    Herr Hansa I wholeheartedly agree. It amounts to Petrobras being the Brazilian government's preferred tool for developing the country's oil reserves.

    They have taken a number of measures to essentially lockout foreign oil companies from operating in Brazil, from defining oil assets as strategic assets, forcing foreign oil companies to enter into partnership with Petrobras to taking a heavy hand prosecutorial approach for oil leaks by foreign companies.

    If anything Petrboras is ill equipped to access the oil in the deepwater pre-sal fields and will need all of the technological help and expertise it can get. That as you have pointed out can only come from companies like Chevron and Transocean.

    On top of which you have local content laws which are delaying Petrobras ability to obtain the equipment required to access the pre-sal fields.

    I certainly don't expect to see much relief for investors in Petrobras in the short to medium term or even the long-term until the government and its policies change.

    The case against Chevron and Transocean is probably one of the most heavily manipulated, disparate and interventionist applications of the law ever seen. Every tie it starts to appear that the Brazilian courts have come to recognize this there is another order made against Chevron and Transocean. The latest being that they have to cease all production in Brazil.

    All of this will only harm Brazil's oil industry and the country's reputation while acting as a deterrent for international companies seeking to operate there.
    Aug 4, 2012. 08:19 PM | 4 Likes Like |Link to Comment
  • Petrobras' (PBR) first quarterly loss in 13 years has more to do with the real's depreciation than recurrent factors, CEO Maria das Gracas Foster says. The company lost 1.35B reais ($666M) vs. an expected 2.94B-real profit, and the need for international financing means heavy exposure to the dollar. Production gains of 1.5% in the past year (to 2.62M bpd) marked the slowest rate since 2007. (Beyondbrics: It's not just the FX[View news story]
    The problem is that the Brazilian government views Petrobras as a national policy tool and that the oil wealth is to benefit Brazil rather than share holders. While this is a commendable approach it has seen Petrobras become nothing more than a political and economic policy tool where the rights of shareholders are non-existent and the belief that there is no obligation for the company to act in their interests http://bit.ly/RAB4bs .

    I also believe that it has been an influencing factor in the Chevron / Transocean case which I believe has been a means of putting foreign companies in the sector on notice and ensuring that they are incapable of competing against Petrobras http://bit.ly/KcEeTf .
    Aug 4, 2012. 07:50 PM | 1 Like Like |Link to Comment
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