Stock Market

While the American markets are experiencing a positive year, albeit with some large slumps, the real action has been taking place in the East, where the Indian and Chinese markets continue to grow at an incredible pace.  With Asian markets rising from Hong Kong to Mumbai, American investors are taking advantage of the growth through ETFs designed to zero into certain markets, sectors, or economies by acting like mutual funds and offering investors a ‘basket’ of stocks, for a fraction of the cost of buying each individual stock.  Groups like Barclay’s and Merril Lynch offer ETFs for everything from internet technology groups, to market indexes, to groupings of major companies in countries and regions.  These last groups are the ones that are particularly interesting, as so-called emerging markets are taking off.  Let’s look at a few of ETFs for Asia.

• iShare MSCI Brazil (EWZ): Brazil has been one of Latin America’s economic leaders over the past few years, and EWZ has had a banner year this year.  Some of the key holdings include Petroleo Brasiliero, Petrobras, Companhia Vale do Rio Doce (RIO), and Banco Itau.  The ETF is heavily weighted in energy and industrial materials, with these two sectors making up roughly 56% of all holdings.   EWZ is up over 80% on the year, even considering that it lost around 50% in a late summer dip.  EWZ is currently trading at $78.80 and is rated a ‘B’ and a ‘Buy’ by thestreet.com.
• First Trust ISE Chindia (FNI):  China and India are the hot markets in the world at the moment showing huge returns to investors, and this new ETF is designed to allow investors to enter both markets under one ‘umbrella’ ETF.  Since its inception in May, FNI has gone up almost 50% on the strength of some of the biggest companies in the two countries.  Among the companies represented in FNI are: China Life (LFC), Infosys (INFY), Petrochina (PTR), and Satyam Computer (SAY).  Looking at FNI’s holdings, one notices that the sectors are fairly equally weighted, with software at 18%, energy at 12%, telecommunications at 12%, financial services at 16%, and business services at 13%.
• iShares MSCI Hong Kong Index (EWH):  Hong Kong is the financial hub of Asia, and EWH offers investors an way to own the whole index.  EWH is heavily weighted in the financial services sector, with over 55% of its holdings there.  Telecommunications, utilities, and consumer services are among the other major representations.  Some of the major companies included are: Bank of China, Hong Kong and China Gas, Espirit Holdings, and Sun Hung Kai Properties.  EWH has returned over 30% for the year, and is rated an A+ Buy by thestreet.com.

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