This time I would like to talk about the blue chips of Russia, and in general, touch upon the nuances associated with such companies in world practice. To begin with, investment in the Russian Federation in terms of its development is several steps below other countries. Investors will face exorbitant commissions from brokers, high government taxes, restrictions on trading operations, as well as the eternal search for profitable financial instruments.
Novice investors have a tough time. However, many beginners do not seek to hit the jackpot. They have enough stable monthly charges. This is where the blue-chip theme comes up. This is a great chance to make consistent profit without high risk. I will tell you in more detail about the meaning of the term, its origin, and I will definitely give illustrative examples of Russian and foreign companies included in this list.
What stocks are referred to as blue chips?
This term is known to every stock investor. It means the securities of the largest organizations in the state. Such companies are systemically important. They must comply with the following two principles: shares are liquid, and their price is constantly growing. That is, papers can be purchased at any time in the required quantity, and after a while it is no less easy to sell. The largest firms consistently pay dividends due to shareholders, the amount of which is no worse than the interest on bank deposits.
Blue chips are popular with investors around the world. They always show positive dynamics, are extremely rarely overvalued and are very profitable for long-term investments. They will not show sudden growth in a short period of time. In the context of one trading session on blue chips, it will not be possible to raise big money. However, for long-term investments when investing at least 10-15% of the monthly salary, they are just perfect.
You can trade shares of blue-chip companies by registering with a forex robot Abi.
Origin of the term "blue chips"
The homeland of market trade is called the United States. There, already at the beginning of the XNUMXth century, securities of different-scale companies were being sold with might and main, brokerage firms were operating, and everyone could become participants and try to make money on investments.
The exchanges themselves appeared much earlier. First was organized back in the XNUMXth century in Antwerp. But at that time, investments were not as impressive as they are now. Exchange trading was gradually gaining volumes and money supply, and the heyday came just in the XNUMXth century.
In those days, America was rightfully called the capital of all gambling. Unsurprisingly, most of the investors used to visit local casinos on a regular basis. At that time, it was more than commonplace to squander the capital earned on the stock exchange while sitting at the roulette or card table. In addition, trading on the exchange itself was in many ways similar to a number of gambling games, where the risk of being left without money was almost 50/50. That is why the local terminology from casinos gradually began to migrate to the investment sector.
And here are our famous blue chips. The companies got their name from the comparison with the most expensive casino tokens. It is logical that the largest firms with enviable financial stability have received this nickname from that moment.
In our time, the terminology has become somewhat more complicated. Now, blue chips mean exactly the enterprises that occupy key places in the internal system of the country's economy. These are large organizations characterized by financial stability and stable average stock returns.
Amount of dividends
By purchasing securities of such companies, you can always count on the growth of quotations and regular payments. However, if we consider the dividends on blue chips in the scale of the entire market segment, then their size will turn out to be very small. This is easily justified by the fact that you practically risk nothing. An investor purchases shares and then simply monitors their value. No excitement and play.
Blue chips of the Russian market usually give their depositors an income of 8-9% per annum. The exact size depends on the company, as well as the general situation in the country's economy. Gazprom is an excellent example. In 2017, he gave his shareholders a payout of just 6,08%, the lowest among domestic blue chips. And the next year didn't get any better for the depositors. But MTS has been issuing dividends of 9% per share for several years.
Despite the fact that the value of blue chips is constantly increasing, and payments are made regularly and without delay, the total return on such investments is much lower than investments in securities of other companies. However, this is still higher than the standard bank deposit rate, which often does not even cover the domestic inflation in the country. Long-term investments help not only preserve capital, but also bring good returns for 5-10 years.
Who makes the blue-chip list
This is the work of independent appraisal companies or the exchange itself. In Russia, it is the second option that is more popular. But in the West and in European countries, rating agencies are very common. The list of blue chips usually includes securities of those organizations that have a fairly high level both in terms of their niche and the entire state as a whole.
In the Russian Federation, the list is made by the MICEX. Its employees, based on the analysis of the liquidity of shares, form a list of organizations whose financial results at the end of the year were the highest. There are 15 positions in this list in total.
Features of blue chips
The company's securities receive such a significant status due to three main features voiced by the world investment practice:
- High liquidity. Such shares must certainly have a constant trading turnover. Due to this, the minimum difference between supply and demand is achieved. As a result, losses in the resale process are also reduced.
- Stable rise in share prices over the past few years. It is about the real growth of prices, since this indicator speaks of a stable financial condition, and not of speculation in the securities of a legal entity. The increase in profits, the regular launch of new directions of production or the expansion of production volumes are taken into account.
- Impact on the economy. Shares can only become blue chips if the company is in the leading position in its industry. Moreover, monopolies are also often awarded this title.
Sberbank and Gazprom are constantly on the list of blue chips. This is due to the high rating of these organizations, position in the state market and stability. But a small company in Saratov, which dominates any narrowly focused industry, cannot claim to be included in the list. Its shares will simply not be bought by investors.
Financial investments in blue chips
This is the best option for a long term investment. Such shares are reliable, practically risk-free, and demonstrate good profitability (dividends for the reporting period come out more than the average rate on bank deposits). These securities are slowly but surely increasing in value, and due to their high liquidity, they can be turned back into money at any time without loss.
If you do not have the opportunity to "say goodbye" to finances for a long time, look for good options in the short term. For example, overvalued shares of medium-sized firms, the value of which depends on speculation. And this is not the only opportunity to make money here and now. There are also undervalued securities, for which, with the proper skill, you can catch a rapid growth after a very short period.
The main disadvantage is the increased risks. If you've never worked with an exchange or studied finance before, consider the blue-chip market. Otherwise, trading will be like a casino game, in which the consequences of each step are almost unpredictable.
I advise all conservative investors, as well as beginners who want to receive small but stable profits over time, to invest in blue chips. So you will save yourself from capital drawdown and financial disaster.
Formation of a conservative investment portfolio
This is a collection of certain stocks that generate a small but constant income. Usually it includes securities of mid-level companies that do not have enough stars from the sky, but at the same time regularly pay dividends due to investors. You must clearly understand that the higher the risk in an investment, the more chances you have to hit a real jackpot. However, you can lose everything literally in one day. Therefore, a conservative portfolio is perfect for long-term investments.
It contains 80% of bonds and stable securities, as well as 20% of assets with an average risk of drawdown. Usually a smaller share is occupied by debt obligations of more or less proven firms and second-tier shares.
In the Russian Federation, such a portfolio has the following structure: 40% of government and municipal bonds, 40% of blue-chip stocks and 20% of second-tier securities (firms that have firmly settled in the niche, but cannot compete with the market leaders). Having formed a portfolio according to this principle, you can get about 7-12% per annum. Beginners will appreciate the simplicity of these investments, as there is practically no need to work with the tools. From time to time, study the changes in stock indices to stay up to date on the current situation. Nothing else is required. Take profit, increase investments and watch the growth of the account balance.
Blue chips of Russia
As I said above, this list is compiled by the Moscow Exchange and has 15 positions. The list includes shares of the largest companies in the country, including the following organizations:
- Surgutneftegaz JSC;
- X5 Retail Group;
These are leaders in their industry, occupying the top three positions. The demand for their securities is always growing, and the financial stability is not in doubt. At the same time, many of these giants regularly submit reports of colossal losses or meager incomes. However, the constant infusion of finances from the Government of the country will not allow their position to be shaken. Consequently, obligations will always be paid off on time and in full.
Industries with the most stable companies
In the case of Russia, the blue-chip market consists primarily of the mining and manufacturing sectors. The list also includes representatives of large-scale retail - X5 (Perekrestok and Pyaterochka are also located here) and Magnit.
The most financially stable companies in Russia are still firms whose activities are related to natural resources. Everything related to oil, gas and minerals is characterized by unprecedented stability and low risk. The profitability of this area directly depends only on the amount of extracted resources. One thing should not be forgotten about the artificial decline in raw material prices that arose in 2014-2015. with oil. This can also be, although very rarely.
Foreign blue chips
The American and European securities markets are rightfully considered the most powerful in terms of money and commodity turnover. Their participants are large and reliable organizations. And with small investment portfolios there is frankly nothing to do there. The only option is to make money on the global financial and economic crisis, when stocks will simply collapse in price. In all other cases, you must act extremely carefully, considering each step. We are talking about a much higher profitability with equivalent cash injections.
Investing in foreign companies is a kind of search for stability. Russian investors will be able to earn more on local blue chips. However, income will be calculated in national currency, which is not very much quoted on the world market.
The list of blue chips in Europe is called Euro Stoxx 50. It includes fifty of the largest and most influential companies in the local economy. Most of them also belong to the industrial and mining sector. There are also firms in the fields of finance, chemistry, communications and electronics. Here is a list of the largest blue-chip representatives in Europe:
- SAP SE;
- Volkswagen Group;
- Groupe Danone;
- Orange SA;
- Daimler AG;
- Vinci SA.
The American stock market is similar in structure to the European one. Here, too, there are world-famous companies and trillions of dollars in cash. Let me note that it was the organizations from the United States that first began to actively expand in breadth, mastering new areas of activity for themselves. The main features of the American market are constant development and a favorable investment climate.
Here, the blue-chip list is called the Dow Jones Index. It includes the largest US companies. The preferences of investors from all over the world depend on its changes. In case of active growth of the Dow Jones index, the majority is invested in the American economy. If it starts to fall, investments are diverted to other stock markets.
US blue-chip companies:
- Home Depot, Inc .;
- Caterpillar, Inc .;
- UnitedHealth Group Inc .;
- Coca-Cola Co .;
- Nike Inc .;
- Merck & Co., Inc .;
- Wal-Mart Stores, Inc .;
- Pfizer, Inc .;
- Walt Disney Co .;
- Microsoft Corp .;
- Chevron Corp .;
- JPMorgan Chase and Co .;
- Exxon Mobil Corp .;
- Visa, Inc .;
- Procter & Gamble Co .;
- 3M Co .;
- The Goldman Sachs Group, Inc .;
- Intel Corp .;
- United Technologies Corp .;
- Apple Inc .;
- EI du Pont de Nemours & Co .;
- Johnson & Johnson Inc .;
- Walgreens Boots Alliance, Inc .;
- McDonald's Corp .;
- Boeing Co .;
- Verizon Communications;
- International Business Machines Corp .;
- Cisco Systems;
- American express Co.
In fact, there are a lot of world famous companies in America. Those on this list most often deal specifically with finance or develop in any other industry. Truly, nothing is impossible for US companies.
Blue Chips of the East
There are two dominant states in Asia. These are China and Japan. Their companies are steadily moving forward and are constantly showing positive dynamics. The secret lies in the culture of the countries themselves. The business develops by its creator not just over the years, but throughout his life.
Asian blue chips are showing gradual but steady and steady growth. It is worth investing in them at least in order to preserve capital and neutralize the effect of inflation.
The best Japanese companies are listed on the Tokyo Stock Exchange. It includes organizations that are involved in medicine, chemistry, industry, and the automotive industry. Of course, there are also representatives of high technologies here. So, the top of the best in Japan:
- Mitsubishi Corp;
- Honda Motor;
- Japan Tobacco;
- Softbank Corp .;
In China, the most reliable company index is called the SSE 50 Index. We can say that these giants are holding the entire economy of the country. Their shares have enviable liquidity and demand. Most often they occupy a niche in the following industries: chemistry, manufacturing, food processing, mining, science-intensive technologies.
The Chinese blue-chip market includes colossi such as:
- Bank of Beijing;
- China Life Insurance;
- Xinwei Group;
- China National Nuclear Power;
- Orient Securities;
- Yili Group;
- Bank of China.
In which economies is it safer to invest
So, I voiced the largest and most reliable markets, companies and directions. It's time to articulate all the pros and cons of each of them.
I'll start with the advantages of the CIS market:
- the profitability of blue chips is higher compared to other economies;
- there is a chance to play on a sharp drop or increase in price;
- a lot of information in the public domain;
- lack of complex terminology in a foreign language.
And now a few words about the disadvantages:
- Income is accrued only in national currency (rubles). It is rather unstable and underestimated in terms of global analytics. Everything rests on the political position of the state, which definitely does not contribute to the strengthening of the ruble.
- The problem with making accurate forecasts. There is no foreign stability here. The largest firms do not show real financial results, public money goes to questionable needs, and the political environment leaves much to be desired. So analytics is especially tricky here.
If you are interested in a small stable income for a long time, feel free to invest in blue chips of the Russian market... Just don't forget to look at the situation in the country. By the way, the local stock market is quite accessible to private investors with small capital.
Europe and America are stable. Their shares rarely show negative dynamics. However, the decline in the Dow Jones index irritates world investors, forcing them to think about choosing a different economy for financial injections.
The main advantages of investing in the European and American markets:
- Income in a stable currency on a global scale. Key benefit. This is especially noticeable in the long term.
- Transparency. Most of all trading operations remain in the public eye for market participants. You can freely observe what exactly companies are making money on. Consequently, it is also much easier to predict the financial result and your own benefits. This is strictly followed by the law.
- Strong domestic economy. As a result, all blue chips are financially stable. They are clearly not facing bankruptcy. All forecasts for these companies are only positive, which means that you will remain in the black.
There are also a couple of disadvantages:
- Information is difficult to find. If you are not an expert in specific terminology in English, you will have to face a serious translation problem.
- Yields are below the blue-chip CIS. The difference is especially visible in a short time period. If you are more interested in seeing the financial result as quickly as possible, then it is better to opt for the Russian market.
I turn to Asia. Detailed analysis reveals the following advantages:
- High reliability of blue chips. The mentality of these countries is very different from that of Europe and America. Here work is a whole culture. She is inherited, and her position is treated with great trepidation and respect. As a result, reliability and stability are much higher.
- Continuous development. In just the past 50 years, China has made fantastic economic breakthroughs. Japan did the same. India is actively beginning to catch up with them. There are real prospects.
- Volatility of the national currency. Not everyone considers this a plus. However, a knowledgeable investor will definitely use the yen and yuan income wisely. This currency is recognized as undervalued, therefore, in the future it will only grow in price. It's all about the specific policies of China and Japan. They deliberately undervalue in order to stimulate domestic production. As a result, local companies receive even more revenue.
Moving on to the disadvantages of the Asian stock market, which are very similar to the disadvantages of America and Europe:
- An extremely problematic search for information. There is a language barrier and a difficult-to-learn adverb, which is also literally crammed with terms. You will either have to learn the basics of Chinese, or try to find something in the European segment.
- Reduced income. To our investor, this level of profitability will seem clearly insufficient.
Let me summarize a little. The Russian stock market is generally suitable for all investors for whom the local currency will come off. Income is higher than from shares of foreign companies, adequate risks and the presence of at least some dynamics. In principle, if there are no force majeure, then investments in blue chips on the Russian market will justify themselves for many years to come.
Investments in European and Asian companies are calculated for a longer period. The profitability of blue chips is lower here, but if the downward trend in the Russian currency continues, someday the profit from foreign projects will be several times higher than even the indicators of the CIS market.
If you are a beginner in the field of investment, then I advise you to first try your hand at your native stock market. It is easy to search for information, and the return will be higher than foreign investments.
Blue Chips Videos
Blue chips are securities of the largest and most stable companies in the country that receive support from the state and form its internal economy. Such stocks are distinguished by enviable stability, average profitability and growth. They are easy to buy and very easy to sell without losing value.
Investing in blue chips is secure. This is stability and the absence of sudden shocks. Great for those planning to set aside some of their monthly income. Such investments are recommended specifically for novice investors, since in the process of learning the basics there is a chance to increase the portfolio by 1,5-2 times.