As global currencies swing, international trade is quickly shifting. With exchange traded funds, investors could capitalize on some countries’ excess trade balance.
There are 36 emerging and developing economies expected to generate a current account surplus, or more exports than imports, this year, according to Bloomberg News.
Asia’s low labor costs help provide the region’s exporters with an edge on the intnerational stage. Singapore is expected to generate a trade surplus of about 20% of its gross domestic product. The iShares MSCI Singapore ETF (NYSEArca: EWS) has increased 3.6% over the past week but is down 2.8% year-to-date.
Additionally, Taiwan, a major supplier of information, communications and electronics devices, is expected to produce a surplus of 11% of GDP. The iShares MSCI Taiwan ETF (NYSEArca: EWT), which includes a heavy 59.0% tilt toward the tech industry, is up 6.8% year-to-date.
South Korea also recently posted a record trade surplus in February and is expected to a trade surplus of 7% this year as exports of cars and electronics continues to pick up pace. The iShares MSCI South Korea Capped ETF (NYSEArca: EWY), which includes 36.4% in tech and 16.1% in consumer discretionary, is 4.5% higher year-to-date. Alternatively, if investors are still worried about a strong dollar or weak South Korean won, thee Deutsche X-trackers MSCI South Korea Hedged Equity ETF (NYSEArca: DBKO) and theWisdomTree Korea Hedged Equity Fund (NasdaqGM: DXKW) both hedge against a weaker won currency. Year-to-date, DBKO is up 5.5% and DXKW is 8.4% higher. [Muted Reaction to Rate Cut for South Korea Hedged ETFs]