ETF XRAY

Carlos Slim Owns Has Big Stake in Mexico ETF (EWW)

By Carl Delfeld of the Chartwell ETF Advisor

It should be no surprise to sophisticated global investors that many of the emerging market country exchange-traded funds are dominated by the top weighted companies in the index. But behind Mexico's ETF (EEW) is the incredible story of one man, Mr. Carlos Slim, arguably the wealthiest man in the world.

In an excellent article in the Financial Times by Adam Thomson is a description of his empire which makes up more than a third of Mexico's stock exchange index capitalization. According to Forbes, which last put his fortune at $53.1bn, Mr. Slim's net worth last year increased by $19bn, or $52million a day. Excuse my language but that is one hell of a cash cow.

At the core of his empire are Telmex and América Móvil (AMX), his telecommunications giants. These two companies alone make up 35% of the iShares Mexico ETF (EWW).

Telmex dominates the landline telephone business in Mexico, accounting for more than 90 per cent of the market. It is also extremely profitable: Adam's points out that every year it generates enough in top-line earnings to pay for its original acquisition price. Somehow Mr. Slim was able to persuade the Mexican government to allow him to enter the wireless market, a business he would later spin off into América Móvil, which he controls.

The company has increased its subscriber rate by an average of 65 per cent a year since 2000, according to Mr. Slim, and now has more than 125 million clients in over ten countries. The company has obviously been extremely active and successful in penetrating tough but lucrative emerging markets all over the world.

In many ways, companies like Telmex and America Movil are already ETFs being a basket of companies under one roof.

Find out more about using ETFs to tap into incredible growth stories like Mexico by joining Chartwell ETF today.

The Politics of Mexico ETF

Politics and economic reform can certainly affect the perfomance of an economy, stock market and the exchange-traded fund that tracks it. Many global ETF investors were worried that the Mexico ETF (EWW) would be negatively impacted following the razor close election of Felipe Calderón as President of Mexico late last year but things have unexpectedly quieted down and the new President has skillfully moved ahead with his agenda.

He and his party have reached a working arrangement with the PRI, which holds the balance of power in Congress. Recently, the legislature has enacted pension reform which raises the retirement age and phases in individual savings accounts. Next on the agenda are reforms of tax and of Pemex, the state oil monopoly.

The Economist is appreciative of Mr. Calderon's efforts so far but points to the need to allow private investment in Mexico's important energy sector and clamping down on corruption as priorities that will require much skill and effort.

By Carl Delfeld of the Chartwell ETF Advisor

ETFXRAY Daily Insight: Oil, Mexico Up, Technology Pullback

On Thursday, U.S. markets were basically flat with technology and financials pulling back. Just about any ETF with a connection to energy had a solid day led by the United States Oil (OIL) ETF which was up 2.82% and iShares GSCI Commodity-Indexed Trust (GSG) and the Energy Select Sector SPDR (XLE) were both up about 2% for the day. Technology and in particular the SPDR S&P Semiconductor (XSD) was the worst performer today down 1.11% with several European iShares such as the united kingdom (EWU) and Sweden (EWD) down just under 1%.

Mexican markets surged on Wednesday as investors interpreted the U.S. Federal Reserve's policy statement as signaling its next move might be to cut interest rates. The benchmark IPC stock index rose 2.96 percent, its biggest gain since Oct. 31, to close at 28,219.55 points.
Latin America and Mexico in particular have been hot markets EWW - iShares: MSCI Mexico was our choice as ETF of the day today after it advanced 3.96% yesterday. The following snapshot is complements of my partner Don Smith of go2mypv.com. You will find the point and figure chart in a blog below.

The Mexican economy is gaining momentum, having grown 4.5% in 2006. Internationally minded investors looking to spice up their holdings with a shot of hot sauce might consider the iShares MSCI Mexico Index (AMEX: EWW). It has its heaviest sector exposure in Wireless Telecom, at 27%, with 15% in construction materials and 12% in diversified telecomm.

The moving averages are: 50 day - 51.82, 200 day - 44.90. This ETFs top five holdings are; America Movil SAB de CV 22.63%, Cemex SA B de CV 15.51%, Telefonos de Mexico SA de CV 9.06%, Wal-Mart de Mexico SA de CV 4.99% and Grupo Televisa SA 4.80% .

Timing is everything for the success or failure of new exchange-traded funds or ETFs. In only nine months -the ProShares family of exchange traded funds (ETFs) passed the $4 billion mark in assets. ProShares offers the first and only ETFs designed to provide short or magnified exposure to well-known market indexes. With volatility and mediocre returns so far this year, ETF investors are warming up to the idea of using a modest amount of these inverse ETFs to buffer their overall portfolio's volatility. I use some of them in a few of our model ETF portfolios but caution investors to be careful and not get carried away.

While some mutual fund families retain strong investor loyalty, many are slipping giving exchange-traded funds an opening. Roughly one out of every three fresh investment dollars is going to ETFs. According to a new report which surveyed 4,000 wealth investors which was released Wednesday by Cogent Research LLC, only 11 of 38 top fund families managed to create meaningful customer loyalty.

Follow President Bush Down South With ETFs

The Economist describes President Bush's trip to Latin America this week as his "spring break" but there is serious business at hand. In particular, exchange-traded funds or ETF investors should follow his agenda in two countries, Mexico (EWW) and Brazil (EWZ).

In a recent poll for the BBC World Service, 64% of Argentines, 57% of Brazilians, 53% of Mexicans and 51% of Chileans said they had a “mainly negative” view of American influence. But economic ties grow stronger every day. Brazil, in particular, is still one of the cheapest markets in the world with a much stronger balance sheet than even a few years ago. On a price to earnings basis, the main Brazil index trades at just over eleven times earnings. Mexico is a bit more expensive at fifteen times earnings. Keep in mind that 28% of the Mexico ETF (EWW) basket is in two companies: America Movil SA and Cemex.

Mr. Luiz Inácio Lula da Silva, Brazil's president, is expected to visit Mr Bush at Camp David in a few weeks.

Mexico ETF (EWW) XRAY

iShares MSCI Mexico Index Fund (EWW). A review of the Point and Figure chart above paints a picture of consistent growth with demand being in control the majority of the time. Of the nine columns of O’s over the last six years the longest lasted six months back in June 2002. The most significant reversal was in May through June of 2006 when EWW slipped 27% from $44 to $32. Since June 2006 EWW has looked very strong with just minor reversals lasting less than a couple of weeks each. Today EWW is in demand having just broken a double top and trading well about its bullish support.

By DE Smith of MyPortfolioView

The Politics of Mexico ETF

The Mexico exchange-traded fund or ETF (EWW) has been a nice performer even in the wake of last year’s political uncertainty following the razor close presidential election. Still, ETF investors need to pay close attention to politics since they are the key to market reforms that ignite and sustain bull markets.
The Economist notes that for seven decades, until Vicente Fox won the presidency in 2000, the Institutional Revolutionary Party (PRI) governed Mexico. Its political monopoly did not begin to wane until the 1980s, when its own left wing broke away to form the Party of the Democratic Revolution (PRD) and it was challenged from the right by Mr. Fox's National Action Party (PAN).

But that leaves the PRI holding the balance of power in Congress, a position it has used to obtain the speaker's job in both houses. Its position in the centre is a potential asset, as Mexican politics is tugged between the conservative PAN and the PRD to the left. The PRI will shortly select a new leader who hopefully will move the party from an obstructionist role to that of a power broker in enacting needed reform in areas of energy, taxes, public-sector pensions, telecommunications and education.

By Carl Delfeld of the Chartwell ETF Advisor