ETF XRAY

Finally, Some New Country ETFs From Barclays

I first became intrigued with exchange-traded funds when I saw the line up of country-specific ETFs on Barclays iShares menu. There are now 23 country ETFs including two that track the Japanese market.
My waiting for more country ETFs seems to have ended last week as an SEC filing listed the following ETFs in the pipeline: iShares MSCI BRIC Index Fund, iShares MSCI Chile Index Fund, iShares MSCI Israel Index Fund, iShares MSCI Thailand Index Fund and a iShares MSCI Turkey Index Fund. These are welcome but were certainly not at the top of my wish list. What about Ireland, Norway and Denmark?

Thailand is interesting as it has been the best market in Asia and is also still one of the world's cheapest. I have also gotten quite a bit of calls asking about turkey. Israel is a technology center that packs a punch way beyond its weight. Chile is a wonderful success story and the star of Latin America not to mention an excellent play on copper.

Many purists are scornful of the country ETFs since they tend to be dominated by a few big multinationals and also are increasingly less dependent of their domestic economy. I accept that they are a hybrid; part play on global growth and part play on the home economy. The emerging market country ETFs (There are seven of them) are more centered on their country's economy. Plus, studies have shown that where a company has its primary listing and the perception of its home economy does impact stock prices.

Regardless, I find it continually fascinating to buy a county's stock market with just a click of the mouse.

By Carl Delfeld of the Chartwell ETF Advisor

Southeast Asian ETFs Manufacturing Power

Asian ETFs such as the South Korean ETF (EWY), Singapore ETF (EWS), Indonesian ETF (IF), Malaysian ETF (EWM), Taiwan ETF (EWT), India ETF (IIF) and the Philippines are all benefiting from a surprising trend in global manufacturing.

In eight months Intel has committed as much money to Vietnam as it had to China during the previous ten years. In Malaysia, Flextronics has ramped up the production lines of a new M$400m ($110m) factory to make computer printers for another American firm, Hewlett-Packard and in Indonesia, Yue Yuen, a Hong Kong-based shoemaker, has been rapidly increasing its footwear for brands like Nike and Adidas.  

All of these developments are highlighted in a current Economist article that describes how South East Asian countries, rather than being hurt by Chinese growth, are being helped by it. Taken together, South Korea, Taiwan, India and the Association of South-East Asian Nations (ASEAN) increased their share of global manufacturing from less than 7% to more than 9% in the decade to 2003. Exports also rose across the board.

Interestingly, only the United States and Canada saw their shares of global output rise—with just over a quarter between them. Most things nowadays might seem to be made in China, but North America remains the true workshop of the world. American manufacturing output leads the world and is twice its nearest competitor,
Japan.  

As the Economist article points out, costs are only part of the equation. Just as important is diversification. Having already moved a big chunk of their production to China, many firms are reluctant to put any more of their eggs in the same basket.

Southeast Asian ETFs Boosted by Rising Output

Asian ETFs such as the South Korean ETF (EWY), Singapore ETF (EWS), Indonesian ETF (IF), Malaysian ETF (EWM), Taiwan ETF (EWT), India ETF (IIF) and the Philippines are all benefiting from a surprising trend in global manufacturing.

In eight months Intel has committed as much money to Vietnam as it had to China during the previous ten years. In Malaysia, Flextronics has ramped up the production lines of a new M$400m ($110m) factory to make computer printers for another American firm, Hewlett-Packard and in Indonesia, Yue Yuen, a Hong Kong-based shoemaker, has been rapidly increasing its footwear for brands like Nike and Adidas.

All of these developments are highlighted in a current Economist article that describes how South East Asian countries, rather than being hurt by Chinese growth, are being helped by it. Taken together, South Korea, Taiwan, India and the Association of South-East Asian Nations (ASEAN) increased their share of global manufacturing from less than 7% to more than 9% in the decade to 2003. Exports also rose across the board.

Interestingly, only the United States and Canada saw their shares of global output rise—with just over a quarter between them. Most things nowadays might seem to be made in China, but North America remains the true workshop of the world. American manufacturing output leads the world and is twice its nearest competitor,
Japan.

As the Economist article points out, costs are only part of the equation. Just as important is diversification. Having already moved a big chunk of their production to China, many firms are reluctant to put any more of their eggs in the same basket.

Chartwell ETF Advisor’s Asian Opportunity ETF portfolio holds many of the ETFs discussed in this post.
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