B10| Tuesday, September 3, 2019 THE WALL STREET JOURNAL.
Financial
Literacy
Has a
Gender Gap
Progress needed in
empowering womenCigarette sales in 2018Source: Euromonitor InternationalChinaIndonesiaU.S.RussiaJapan2.37 trillion cigarettes307.1 billion240.9 billion236.5 billion132.7 billionHEARD
ON
THE
STREET
FINANCIAL ANALYSIS & COMMENTARY
Only 23% of women take charge of long-term financial-planning decisions.PETRI OESCHGER/IMAGE SOURCE/ZUMA PRESSnouncement of new tariffs on
U.S. imports and President
Trump’s response, it closed
out the month with its bestweek since early June. Last
week’s 2.8% rally was driven
by softer rhetoric from both
sides and hopes that theworld’s two largest economies
can reach a cease-fire on fur-
ther tariffs during coming
high-level talks.Still, August was notable
for its volatility. The S&P 500
posted 11 daily moves of at
least 1%, the highest total inA gender gap in financial liter-
acy is holding many women back
when it comes to taking the lead
in their own financial planning.
As women become bigger con-
tributors to household income,
they have the opportunity to take
a more prominent role in making
family financial choices, but re-
search suggests many aren’t yet
stepping up to the plate. Part of
the problem may be a lack of acu-
men, but fear and stereotypes
don’t help.
There is no monopoly on lack-
ing a knack for figures. According
to a 2017 paper from the Global
Financial Literacy Excellence Cen-
ter, 77% of the world’s adult popu-
lation lack an understanding of
basic financial concepts. Women
have less of an understanding
than men, though.
A recent survey conducted by
UBS found that only 23% of
women globally take charge of
long-term financial-planning deci-
sions. And it isn’t a generational
problem: 56% of women aged 20
to 34 defer to their spouse com-
pared with 54% of women over 51
years of age. A report from the Fi-
nancial Industry Regulatory Au-
thority suggests that women’s fi-
nancial understanding is going in
the wrong direction, too. Baby
boomer and Generation X women
revealed higher levels of financial
literacy than millennial women
based on a five-question quiz.
While many married women are
inclined to leave investing to their
husbands, single women fall short,
too. A financial-literacy gap exists
between single men and single
women, a 2014 academic paper by
Dr. Tabea Bucher-Koenen, head of
the ZEW Research Department,
found. In the U.S., in particular,
single women display very low
levels of financial literacy in com-
parison with those in the Nether-
lands and Germany.
Women have good reasons to
up their game. As women gain
more undergraduate and advanced
degrees than men, they are carry-
ing more student debt, according
to Merrill Lynch. Parents tend to
cut off financial support to women
much more quickly, too. Among
those aged 30 and over, 62% of
men still receive financial help
from parents versus only 49% of
women. Later in life, the conse-
quences become more dire. UBS’s
study found that 74% of widows
and divorcées discovered negative
financial surprises when they fi-
nally took control of their fi-
nances. A 2013 study based on
Census Bureau figures estimates
that 17% of all women aged 65 and
over are living in poverty com-
pared with approximately 12% of
all older men.
Twice as many women as men
in the U.S. have no money in the
stock market, Merrill Lynch says,
and 41% of young women versus
28% of men say their biggest fear
isn’t market volatility but not
knowing what they are doing.
While nearly 91% of women say
they trust their instincts when it
comes to having children, only56% trust them when it comes to
investing.
Some women have started to
take the figurative bull by the
horns. Women now account for
46% of students enrolled for mas-
ter’s degrees in business, according
to the most recent data from the
National Center for Education Sta-
tistics, compared with just 25% in- Several organizations are
working to get younger girls ex-
cited about math from an early age,
including the National Girls Collab-
orative Project and Invest in Girls.
As more women take control, a
business opportunity is arising for
canny firms. Former Citigroup
Chief Financial Officer Sallie
Krawcheck recently founded El-
levest, an online tool that helps
educate women and facilitate in-
vestments specifically for them.
Fidelity has a website dedicated to
women and investing, which in-
cludes a checklist and step-by-step
processes for help.Goldman
Sachs’s private wealth-manage-
ment group has developed a
women’s forum in 11 cities that
aims to empower clients and pros-
pects to play a meaningful role in
managing their wealth.
According to Dr. Bucher-
Koenen, women are much less
likely to consult financial advisers
to compensate for their lack of
knowledge. Like glass ceilings in
the workplace, the financial-liter-
acy gap will take a conscious ef-
fort to overcome.
—Lauren Silva Laughlin
Hot Tobacco Stock
Cools in Hong Kong
Cigarette sales are holding up
better in China than in many mar-
kets, but that is no reason for in-
vestors to continue to puff on
Hong Kong-listedChina Tobacco
International.
China is the world’s largest to-
bacco market by far. Roughly 2.4
trillion cigarettes were sold in the
country last year, almost all of
them made byChina National To-
bacco, or CNTC. That is roughly
three times the number sold
world-wide byPhilip Morris In-
ternational, the world’s largest
non-Chinese tobacco company. U.S.
leaderAltria, which last week dis-
closed merger talks with Philip
Morris, sold just 110 billion.
The Chinese market also is
shrinking at a relatively gentle
pace by global standards. Cigarette
sales fell 4.9% over the five years
through 2018, compared with a
world average of 9% and double-
digit declines in mature markets
such as the U.S. and Japan, accord-
ing to Euromonitor International.
And because of higher prices, rev-
enue in China actually grew 10%
over the period.
The problem for investors is
that only the Chinese state bene-
fits from this lucrative business.
CNTC is a state-owned monopoly
that controls the production and
sale of cigarettes in the country.
Foreign companies have to license
their brands to CNTC to gain ac-
cess, but so far their sales amount
to a rounding error.
Philip Morris, for example, only
has 0.1% of the market, according
to Euromonitor.
The tobacco industry contrib-
uted 1 trillion yuan ($140 billion)
to the Chinese government’s cof-
fers last year, which is equivalent
to around 6% of total tax revenue.
The government doesn’t have a
strong incentive to introduce anti-
smoking campaigns that might
choke off such a significant reve-
nue source.Investors were excited to get
their hands on part of this state
monopoly when China Tobacco In-
ternational, a subsidiary of CNTC,
went public in Hong Kong in June.
Shares of the company have more
than quadrupled their initial offer
price.
But China Tobacco International
is a very poor proxy for the Chi-
nese cigarette industry. It doesn’t
sell cigarettes in China, the most
lucrative part of the group. In-
stead, it mainly imports and ex-
ports tobacco leaves.
Although it has exclusive rights
over this activity, the business
doesn’t sit in the walled garden of
a state monopoly and is subject to
all manner of global pressures.
The company’s net profit for the
year’s first half, announced last
Monday, fell 30% from a year ago,
mainly because of the trade battle
with the U.S., where around 30% of
the company’s tobacco leaves were
sourced last year.
The stock has fallen 11% since
last Monday’s close, but it is still
valued at 52 times forward earn-
ings.
It is time investors quit.
—Jacky WongMARKETS
any month since February
2018, according to Dow Jones
Market Data. Seven of those
swings were gains.
Many investors believe
markets will stay volatile into
September. The average S&P
500 return for September is a
drop of 1%, the worst of any
month. Since its inception, the
index has ended lower in Sep-
tember 54% of the time, more
than any other month.
Some analysts believe
moves in the bond market will
offer clues about where stocks
might go next. The yield on
the 30-year U.S. Treasury
bond—the longest type of U.S.
government debt and one of
the most sensitive to changes
in expectations for the econ-
omy and inflation—has fallen
to record lows with analysts
worried a slowdown overseas
will engulf the U.S.
Prices of commodities criti-
cal to manufacturing, con-
struction and transportation
also declined in August on
fears that a weaker world
economy will limit demand
and result in excess supply.
The S&P GSCI Commodity In-
dex fell 6%.
Another factor hurting
commodity prices is the stabil-
ity of the dollar. A stronger
U.S. currency makes assets de-
nominated in dollars more ex-
pensive for overseas buyers,
and the dollar in August rose
for the sixth time in seven
months. It ended the month at
a new multiyear high. Some
analysts also are worried that
the dollar’s strength could
continue to dent profits at
multinational companies that
need to convert overseas earn-
ings into dollars.
Anxiety about falling earn-
ings is another reason inves-
tors say this year’s stock-mar-
ket rally remains fragile, citing
sporadic trading volumes and
a recent decline in liquidity, or
how easy it is to buy and sell
investments.
People “don’t want to take
bigger risks out there,” said
Parag Thatte, a strategist at
Deutsche Bank. “That causes
bigger swings.”
—Gunjan Banerji
contributed to this article.Stocks capped off a volatile
August down only slightly for
the month and near recent re-
cords, the latest example of
the bull market’s stability de-
spite threats from an overseas
economic slowdown and un-
certainty about trade policy.
The S&P 500 closed down
1.8% for August, paring most
of its early losses after hopes
of easing trade tensions
stoked investor appetite for
riskier assets. The Dow Jones
Industrial Average and tech-
laden Nasdaq Composite also
rallied this past week to finish
the month down 1.7% and
2.6%, respectively.
The moves illustrate how
investors remain focused on
global threats, such as a slow-
ing economy and the trade
battle with China. At the same
time, many maintain a rela-
tively sanguine outlook on the
U.S., where economic growth
has remained resilient even as
some indicators warn that a
recession may be near.
Recent figures from the U.S.
and abroad have supported
that view. While U.S. gross do-
mestic product grew 2% in the
second quarter—despite trade-
fight uncertainty—growth in
European countries, including
economic powerhouse Ger-
many, had all but ground to a
halt in the period.
“Everything that was really
driving the strong econ-
omy...continues to hold up,”
said Liz Young, director of
market strategy at BNY Mellon
Investment Management, add-
ing that she believes lower in-
terest rates will support eco-
nomic growth despite recent
indicators pointing to a reces-
sion in the coming months.
Investors this week will
parse data points on activity
in the manufacturing and ser-
vices segments of the econ-
omy, as well as hiring figures
from August. Upbeat consumer
spending and strength in the
labor market have fueled some
optimism that stocks can ex-
tend their recent rebound.
After the S&P 500 fell 2.6%
Aug. 23 following China’s an-
BYAMRITHRAMKUMAR
ANDIRAIOSEBASHVILI
Markets Displayed Resilience in Topsy-Turvy August
Positive headlines in the U.S.-China
trade fight have helped the S&P 500
rebound following downturns
throughout the year.Sources: FactSet (S&P 500 index, S&P GSCI index); Dow Jones Market Data (S&P 500 moves, WSJ Dollar Index); Ryan ALM (Treasury)The yield on the30-year
Treasury notefell throughout
August with investors worried
about an economic slowdown.
Yields fall as prices rise.
2.61.82.02.22.4%AugustTheS&PGSCIindexof
commoditiesswung in
August as analysts adjusted
demand expectations based
on trade updates.
420380390400410August300025002600270028002900JF AMJJ ATalks yield
progressTalks get
back on trackTrump
softens
rhetoricStocks posted several large moves in both directions last month.
Number of times the S&P 500 swung at least 1% in either direction
8864202462018 ’19Up
DownTheWSJ Dollar Indexrose for
the sixth time in seven months
in August with many analysts
more confident in the U.S.
economy than growth overseas.
91.890.690.891.091.291.491.6Augustwsj_20190903_b010_p2jw246000_0_b01000_1____xa2019.crop.pdf 1 03-Sep-19 06:07:20