Renewed Cooperation Between Singapore and Malaysia Can Help ETFs

Malaysia and Singapore have been working together to benefit their economies and, in turn, their exchange traded funds (ETFs).

Carl Delfeld for ETFfolio feels investors have finally begun to appreciate that Malaysia offers attributes that are similar to its neighbor to the south, Singapore.

Malaysia has a diversified economy: 43% of its gross domestic product (GDP) is in the service sector, while agriculture is 8%. One-third of its population is under the age of 15. Economic growth last year was 6%.

Malaysia's improvements have given the country power to improve its political and economic relationship with Singapore. In the past, the two countries have had a rocky relationship. By teaming up, though, it could be a win-win situation.

The iShares MSCI Malaysia (EWM) and the iShares MSCI Singapore (EWS) are two ways to get exposure to these countries. EWM is down 5.4% year-to-date, while EWS is up 0.3%.

Singapore's fund is most heavily allocated in the service sector, at 67.5%. Another 20.5% is in information. Malaysia's fund is split between the service (49.2%) and manufacturing (44%) sectors.

 

For full disclosure, some of Tom Lydon's clients own shares of EWS.

Irish And Malaysian ETFs Feel Political Pressure

One of the biggest risks associated with overseas or emerging markets exchange traded fund (ETF) investing has to do with political upheavals that affect the country's economy. A good example is the recent news that will have an impact upon the iShares MSCI Ireland (IRL) and the iShares MSCI Malaysia (EWM).

Irish prime minister Bertie Ahern announced his resignation yesterday amid ongoing questioning about cash donations made to him when he was finance minister in the 1990s. Carl Delfeld for ETF Folio says Ahern will step down from his position to be succeeded by Mary McAleese on May 6th, just prior to the Irish referendum concerning the European Union reform treaty.

Ahern was a key factor in Ireland's economic boom, so the country will be watched closely as it makes its transition to a new leader.

Year-to-date, the fund is down 1.1%.

In Malaysia, the Prime Minister Abdullah Badawi has a weakening office, as members of his cabinet have stepped down, while supporting an open contest for key leadership posts. His UMNO Party is facing hard challenges from opposing parties. Leading companies, such as Telekom Malaysia, have had to be restructured. Routes have been cut from Malaysian Airlines and extra staff have been cut.

Abdullah, like Ireland's Ahern, has had a hand in Malaysia's boom. Capital controls and corruption have come down, and capital structures and costs operate more transparently and efficiently.

Malaysia's fund, after having a strong start earlier this year, is down 8.4% year-to-date.

Playing the Waiting Game With ETFs

  Some believe we're in a full-blown recession, but no matter what they believe, exchange traded fund (ETF) investors shouldn't panic.

Chris Fichera for Consumer Reports suggests staying put and weathering the storm, while making some tweaks to your portfolio:

• While he does suggest that large-caps are attractive and relatively expensive, it's actually the small- and mid-caps that have been outperforming in the last two weeks. Large-caps are up about 1.7%, mid-caps are up about 2.9% and small-caps are up about 5%. There are a variety of small- and mid-cap funds out there, among them:
  • iShares Russell 2000 Growth Index (IWO)
  • iShares Russell 2000 Value Index (IWN)
  • Vanguard Small Cap Value (VBR)
  • iShares S&P MidCap 400 Value Index (IJJ)
  • PowerShares DWA Technical Leaders (PDP)

• International is still attractive. Europe and Japan are slowing down, but there are still emerging markets out there that are growing rapidly, with still more room to grow. Emerging markets can be volatile, so having an exit strategy here is paramount.
  • iShares MSCI Spain (EWP), up 10.3% since March 10
  • iShares MSCI Malaysia (EWM), up 10.5% since March 10
  • iShares MSCI Mexico (EWW), up 8.3% since March 10

• Go with short- or intermediate-term bonds, as long-term bonds don't have the most attractive yields right now. They would also feel the effects if the Federal Reserve were to cut interest rates further.
  
  • SPDR Lehman Short Term Municipal Bond (SHM)
  • iShares Lehman MBS Bond (MBB)
  • SPDR Lehman Aggregate Bond (LAG)
  • iShares Lehman Intermediate Credit Bond (CIU)
  • iShares Lehman Government/Credit Bond (GBF)
  • Market Vectors-Lehman Brothers AMT-Free Short Municipal Index ETF (SMB)
  • PowerShares Insured National Muni Bond (PZA)

Whatever you do, whether you decide to tweak your portfolio or just sit and wait, stick to your investment plan. Once investors are guided by their emotions is when the real trouble begins.

For disclosure, some of Tom Lydon's clients own shares of EWP.

U.S. Malaise Spreads to Malaysia's ETFs and Beyond

Has the economic downturn in the United States finally hit Malaysia and its exchange traded fund (ETF)?

For awhile, the iShares MSCI Malaysia Index (EWM) was one of the few single-country funds exhibiting decent performance despite the woes that seem to have affected other global regions in one way or another. In the last two weeks, though, it's down 5.5%. Year-to-date, it's down 2.3%.

What's going on?

According to Thomson Financial, investors in Malaysia are reacting to, among other things, the recent bad news from Wall Street and the Dow's loss of more than 300 points on Friday. The mood in Malaysia is expected to remain downbeat because of uncertainty about the general elections, which will take place this Saturday.

The ruling coalition is guaranteed to win, but increasing ethnic tensions and a rising cost of living have many believing that there will be a reduced majority.

Will Malaysia overcome its challenges?

Other Asian markets and ETFs are feeling the pinch from Wall Street, too, and experienced sharp drops on Friday:

• iShares MSCI Australia (EWA), lost 4.5%
• iShares MSCI Singapore (EWS), lost 3.4%
• iShares MSCI Japan (EWJ), lost 1.1%
• iShares MSCI Hong Kong (EWH), lost 3.1%

Latin America ETFs Have Stability and Growth to Their Name

We're only six weeks into the year, and the U.S. markets and related exchange traded funds (ETFs) have gotten off to a slow start. The domestic markets are down anywhere from 7-12%.

But emerging markets are another story. Sure, they carry more risk, but they also have been holding their ground where relative strength is concerned. Matthew D. McCall for Seeking Alpha points out that iShares Malaysia (EWM) is the only single-country ETF showing a positive return, up 4% year-to-date.

The next three top performers are all in Latin America:

• iShares Mexico (EWW), down 1%
  
• iShares Chile (ECH), down 2.3%
  
• iShares Brazil (EWZ), down 2.5%

Southeast Asian countries are considered of "above average" risk, while others are considered "top heavy" in the political system. In contrast, Latin America looks good because of its relatively stable government, richness in commodities and concentration in growth. In a rough patch, it can be good to look for relative strength in ETFs by comparing them to their peers.

If you can't decide which Latin American country will perform, another route to take is the iShares S&P Latin America 40 ETF (ILF). It has a concentration in materials and energy (52%) in one fund, and year-to-date, it's up 3.4%.

For full disclosure, some of Tom Lydon's clients own shares of EWZ.

Malaysia ETF Looks Like a Port in a Storm

Little Malaysia is full of big surprises, as evidenced by their single country-focused exchange traded fund (ETF).

iShares Malaysia ETF (EWM) has shown strong performance to date and the small country is ranked the 34th largest economy in the world, reports James Brumley for Seeking Alpha.

The growth is being ignited by free trade. The Malaysian government has amped up its trade with other countries; specifically, Australia, New Zealand and the United States. The new trade agreements are also in effect with Pakistan and Japan, and the multi-year plan has also helped the currency, the ringget, reach its strongest level in a decade.

Also, consider that Malaysia is protected from the global economic contraction. Resources are plentiful, such as oil, timber, rubber, minerals and other materials. Malaysia is proving to be a nice alternative to American stocks.

New Islamic ETF Could Make Malaysia More Attractive

Perhaps investors in the United States could see some benefit from an Islamic exchange traded fund (ETF) issued in another country.

How's that? Economists and industry experts are saying that a new Islamic ETF issued in Malaysia will be good for the economy. Capital markets will get a lift, and foreign investments will increase, reports Tengku Noor Shamsiah for Bernama, because of the demand for Islamic-based products and ETFs.

While there is no Islam-focused fund available in the United States at the moment, investors might at least see Malaysia's boost from its fund evidenced in the iShares MSCI Malaysia (EWM). Meanwhile, the wait for an Islamic ETF here continues. There are none currently in registration with the Securities and Exchange Commission (SEC).

The ETF World Has Two Sides

Investor fund flow trends as witnessed by single stocks and exchange traded funds (ETFs) appear to have a dual nature.

This began in 2007 with money going into safe investments and other flows into the riskier for above-average returns. Carl Delfeld for ETFXRAY reports that assets in emerging markets funds and ETFs doubled over 2007, to more than $800 billion. Compare that with $80 billion just ten years ago. Last week, however, saw record outflows from from European equity funds, and many blame the prospective U.S. fund flows going negative as the impetus.

As Gary Gordon for ETF Expert points out, the market is sick. Whether you call it a mental condition, or the flu, the market is unstable and not doing so hot. As for international country ETFs for 2008, only iShares MSCI Malaysia (EWM) is seeing the light of day. He suggests investing now with an eye toward the future: could worst someday move into first?

Malaysia ETF Bucks The Trend

As the rest of the world appears to be going down with the U.S. markets, Malaysia and its exchange traded fund (ETF) have been able to stay afloat.

iShares MSCI Malaysia Index (EWM) is up 15.5% in the last three months. The nation has climbed 7.5% year-to-date, passing the MSCI EAFE index by 13.69%, so says Trang Ho for Investor's Business Daily. This follows a 45% hike in 2007, and a 36% jump in 2006. Gary Gordon for ETF Expert says he recommends it for those with a high tolerance for risk, and the ability to manage downside risk through the use of stop-losses.

Malaysia's earnings, relative value, cash holdings, monetary policy and risk are very bullish relative to other emerging markets and bonds. It is the 19th-largest trading nation in the world, and can boast that the global credit crunch has not scathed the independent nation.

What's Behind Malaysia ETF's Big Leap?

Malaysia's economy is hopping along, if the performance of its exchange traded fund (ETF) is any indication.

The iShares MSCI Malaysia (EWM) was up 7.7% last week. What's going on?

The country's currency, the ringgit, reached its strongest level since November 1997, Chan Tien Hin of Bloomberg reports. The key index, the Kuala Lumpur Composite Index, posted a fifth-straight record, stocks jumped higher and there was speculation that a possible early general election may drive even more gains.

Some say that Malaysia could be viewed as a safe haven while the United States economy works through its issues.

Meanwhile, according to Forbes, Malaysia's securities watchdog introduced an over-allotment option and price stabilization for initial public offerings (IPOs) in the country. That will allow issuers to sell investors more shares than originally planning so that demand for an IPO can be met efficiently.

Single-Country ETFs...And The Winner Is....

Single-country exchange traded funds (ETFs) can be a good investment for portfolios, however, picking which country is a hard decision. There are many factors to consider like reward-to-risk, performance comparison, pullbacks and time frames, as well as local politics and economics. Matthew D. McCall for Seeking Alpha analyzed 25 single-country ETFs and came up with four that were worthy of the reward-to-risk setup. The winners are, in order of reward-to-risk opportunity:

1. iShares MSCI Spain (EWP) gained 48% in 2006 compared to 13.6% for the S&P; up 22.8% year-to-date, while the S&P 500 is down 0.8%%.
2. iShares MSCI Germany (EWG) gained 32% in 2006, and is up 26.9% year-to-date.
3. iPath MSCI India ETN (INP) year-to-date up 65.4%, and only began trading in December 2006.
4. iShares MSCI Malaysia (EWM) returned 33% in 2006, and is up 32.3% so far this year.

Northern Trust Readies to Enter the ETF Marketplace

There's a new kid on the block of exchange traded funds (ETFs). Northern Trust is entering the  market with a big splash, by offering 19 foreign-market funds, according to Jesse Emspak at Investor's Business Daily.  There is not a domestic to be found in the mix, and according to a filing with the Securities Exchange Commission, the ETFs will track indexes using American, euro and global depositary receipts.

The firm plans for its ETFs to represent 19 countries, with eight of them focused on emerging markets: China, Hong Kong, Israel, Malaysia, Russia, Singapore, South Africa and Taiwan. The rest will track indexes in Europe, Australia and Japan.

There are a few other firms that have ETFs tracking some of the same countries Northern Trust is proposing, including Barclays iShares and State Street Global Advisors' SPDRs.

When it comes to the booming international markets, the more the merrier!

Islamic Cars May Set Malaysia ETF Apart

Islamic cars may set the Malaysian exchange traded fund (ETF) apart. Proton, the Malaysian auto maker, is teaming up with companies in Turkey and Iran to produce "Islamic cars" for the global market. The idea was proposed by Iran, and the cars will feature a compass to determine the direction of Mecca for prayers, and compartments made for the storing of the Quran and headscarves, according to the Associated Press. The Islamic car is meant for export purposes and Iran will develop an auto that can be manufactured in Turkey, Iran or Malaysia.

Proton, of Malaysia, is a component of iShares MSCI Malaysia Index Fund (EWM). For years, the company thrived in an environment where high duties were placed on imported autos, but duties have been lowered to a reasonable level in line with a regional trade agreement. More Malaysians have been buying imported cars as a result.  Perhaps exporting the Islamic car will give them an advantage.

EWM is up 38.2% year-to-date.

What's Up? The Malaysian ETF, That's What.

iShares MSCI Malaysia (EWM) has had a good year and proven itself to be a hearty exchange traded fund (ETF). EWM is up 63% over the past year in comparison to the average emerging-market fund, which is up 55% in general, reports Rob Wherry for SmartMoney.com.

Emerging markets are on the minds of many an investor, and new ETFs focused on these markets continue to be launched. EWM launched in 1996, so it is rare to even find an ETF with a decade long track record. Malaysia's economy is expected to grow at 5.6% this year and 5.8% next year. The country is also touting low inflation, stable interest rates and expanding fiscal policy.

Some things to consider if you want to invest in Malaysia include the fact that their economy  enjoys a good trading relationship with the U.S. So while your exposure is international, a lot can depend on American consumers. The $1 billion ETF is highly concentrated in finance with 32% of assets in that sector. Financials tend to have lower price/earnings ratios than the broader market and EWM has a P/E of 18.  EWM is up 37.6% year-to-date.

New Asian Index Launched; ETFs Won't Be Far Behind

New Asian-related exchange traded funds (ETFs) could be coming soon. Standard & Poor's (S&P) has announced the launch of a new index covering Southeast Asia. Emerging markets in Asia have been on fire lately, so this new index aims to capitalize on that trend. The S&P Southeast Asia 40 Index covers the Philippines, Indonesia, Malaysia and Thailand; Asian countries the S&P refers to as "tigers," says Heather Bell for Index Universe.

However, this isn't the first index to cover Southeast Asia. Currently available is the FTSE/ASEAN 40 Index that launched in 2005, which covers Indonesia, Malaysia, the Philippines, Thailand and Singapore.

The most obvious difference between the two indexes is that the FTSE/ASEAN 40 Index includes Singapore. Twelve stocks and more than 46% of the index's market capitalization is invested in Singapore. In addition to excluding Singapore, the new S&P index uses a modified market capitalization weighting approach that limits individual stocks to 10% of the index and individual countries to 40% of the index. Basically, if investors are looking to capture the performance of the ASEAN region, the FTSE index might be more appropriate. However, if investors are strictly looking for exposure to Southeast Asian emerging markets, the S&P index might be more practical.

Video of Tom Lydon Discussing Single-Country ETFs

Tom Lydon appeared on CNBC's weekly "ETF Tracker" segment of Closing Bell yesterday and discussed German, Malaysian, and Austrian single-country ETFs with Melissa Francis. Video of Tom's segment appears below:

Malaysia ETF Benefits from Rising Prices of Commodities

The strong demand for commodities and their subsequent rising prices have led to a natural resource boom globally, which provides windfall gains to producing and exporting countries and their exchange traded funds (ETFs), experts say. For Malaysia, major non-fuel commodity exports such as palm oil, timber, saw logs, rubber and tin accounted for 6.5% of gross domestic product (GDP) in 2006 compared with 5.2% in 2000, reports Elaine Ang for The Malaysia Star. Including crude oil and natural gas, the ratio to GDP rose to 15.9% in 2006 from 12.4% in 2000. This could be one of the reasons why Malaysia's ETF iShares MSCI Malaysia Index (EWM) has been doing so well. Currently, it's up 32.7% year-to-date with about $852 million in assets.

Malaysia is predicted to expand by 6% in 2008, and there's a 5-year government plan in place to move the economy forward, particularly by spending on education, manufacturing, technology and agriculture.

More ETFs Likely on the Way for Malaysia

The interest in exchange traded fund (ETF) investing as well as REIT investing is growing in Malaysia. Four new REITs were listed on Bursa Malaysia earlier this year, bringing the total number of REITs to 13. Market capitalization of REITs rose 73.5% in a year, ending June 2007, which reflects a growing interest in REITs as a way to access the property market, The Malaysia Star reports.

Only two ETFs are available in Malaysia, as of the end of July. More ETFs should appear following the call to government-linked investment companies to participate in ETFs by selling a portion of their portfolios in exchange for units in ETFs. The economic conditions for ETFs seem fair as domestic demand should remain high and inflation low, according to predictions for 2008 economic growth.

Malaysians definitely seem interested in ETFs and are eager to learn more, as we had someone contact us about possibly speaking at an ETF conference there. More ETFs and a strong economy in Malaysia also could mean positive numbers for the iShares MSCI Malaysia (EWM) ETF that U.S. investors follow. Currently, EWM is up 23.1% year-to-date.

What's the Latest on Singapore's ETF?

As Asian exchange traded funds (ETFs) soar, let's stop and spotlight the iShares MSCI Singapore Index (EWS).

EWS is performing well above the 200-day moving average and is up 25.3% year-to-date, as you can see in the chart below. Singapore, like current superstar Malaysia, benefits from being China's neighbor. Investors and large companies love China for its labor resources, but hate it for the communist government's tight control. Suddenly, Malaysia, Singapore and South Korea are investors' and big companies' best friends. All this foreign investment helps the United States' economy too. Everyone wins.

Before we leave Singapore, here are a few fun facts, courtesy of Fred Fuld of Stockerblog:

• Singapore is one of the few city-states in the world.
• It is the 18th wealthiest country in the world in terms of GDP per capita.
• It is rated as the most business-friendly economy in the world. 

Thinking Global, Acting Local with ETFs

Investing in global exchange traded funds (ETFs) has been a hot topic, as the global markets continue to outperform domestic markets. U.S. markets are reaching record highs, the DIAMONDs Trust (DIA) is up 12% year-to-date, but it still lags behind the top international ETF, iShares MSCI Brazil (EWZ), which is up 46%. SPDRs (SPY) is up 9%.

Recent reports show more money flowing into international ETFs, yet the number of Americans investing internationally is low. Aaron Siegel of InvestmentNews reports 62% of consumers in the U.S. do not believe the U.S. will be a world leader in ten years. Yet only 13% of Americans invest internationally. Will Americans continue to focus on "Made in the USA" or will they look globally to add performance to their portfolio?

Other top performing international ETFs include:

• iShares MSCI South Korea (EWY) - up 35% year-to-date
• iShares S&P Latin America (ILF) - up 35% year-to-date
• iShares MSCI Malaysia (EWM) - up 30% year-to-date
• Claymore/BNY BRIC (EEB) - up 30% year-to-date

For full disclosure, some of Tom Lydon's clients own DIA and ILF.

South Korean ETF Not the Only Shining Star in Asia

As we mentioned yesterday, the exchange traded fund (ETF) iShares MSCI South Korea Index (EWY) is a rising star. However, it looks like EWY has some company as the iShares Asia region country-based ETFs yielded impressive performances last week, says Steven Towns of Seeking Alpha. iShares MSCI Japan (EWJ) was the only fund not up in double digits for the year as well as the U.S. broad market, represented by iShares S&P 500 Index (IVV).

The Flow is Foreign for June ETFs

International and fixed-income exchange traded fund (ETF) assets flourished in June, as investors took a tiny break from U.S. markets. International ETFs gained $3.7 billion in assets. iShares MSCI EAFE (EFA) received $1 billion, the most in its category, reports Trang Ho for Investor's Business Daily. Since investors are putting money into international ETFs, how are they performing? Although EFA gained the most assets, the performance year-to-date doesn't make it the No. 1 performing ETF. 

1. iShares MSCI Brazil (EWZ) is up 45% for the year
2. iShares MSCI South Korea (EWY) is up 37%
3. iShares S&P Latin America 40 (ILF) is up 36%
4. iShares MSCI Malaysia (EWM) is up 32%

EFA is up 14%, and comparing to the U.S. markets, SPDR (SPY) is up 10% year-to-date.

For full disclosure, some of Tom Lydon's clients own ILF.

Emerging Market ETFs Lead the Way

Emerging markets and the exchange traded funds (ETFs) that track them have displayed the best one-year performances so far. Lipper data gives iShares FTSE Xinhua/China 25 Index (FXI) the top spot. Despite its February dip, it has one-year gains at 77.8%. The other hot performers were:

• iShares MSCI Mexico (EWW) 66%
• iShares MSCI Malaysia (EWM) 66.7%
• PowerShares Golden Dragon Halter USX China (PGJ) 68.5%
• iShares MSCI Brazil (EWZ) 69.1%

Strong markets and big inflows pushed up the stocks' prices, which in turn drove up some of the underlying indexes, reports Jesse Emspak for Investor's Business Daily. Economies that centered around natural resources did well over the past year, partially because of the increased demand for commodities like copper and oil. However, buyer beware: Many of the emerging market ETFs that rolled out recently divide the markets into narrower slices. While this could increase the overall volatility, emerging markets ETFs continue to be popular and post favorable returns.

Malaysia ETF: Economy Proves Strong

Malaysia's economy and the exchange traded fund (ETF) that tracks it is on a growth spurt and doesn't look to be topping out anytime before 2008. As Southeast Asia's third largest country, growth should accelerate 6% this year, the fastest pace in 3 years; and is predicted to expand 6% in 2008, report Stephanie Phang and Angus Whitley of Bloomberg.  The economy has enough momentum to stave off interest rate cuts and the government has plans to spend around $58 billion on bridges, roads and other development projects. Next month, over a million civil servants will get their first pay raise in over 5 years.  The ringgit has gained about 2.9% against the dollar this year.

iShares MSCI Malaysia (EWM) is already up 33% year-to-date. Top holdings include Bumiputra-Commerce HLDGS at 9.44%; Malayan Banking 8.29%; and IOI Corp. 6.69%. Financials lead the pack at 31.82%, followed by industrials with 18.17% and consumer discretionary at 13.77%.

Malaysia ETF Leads Asia

Malaysia is ahead of its Asian peers this year, and the performance is evident in the exchange traded fund (ETF). iShares MSCI Malaysia (EWM) is up 34% this year. Daniel M. Harrison for TheStreet.com reports Malaysia is an exporter of crude oil and benefits directly from a climbing price. The country presents stability, a strong demand for raw materials and has good structure for an emerging markets country. Additionally, palm oil puts the country in a powerful position for the world's commodities markets. Palm oil is used in clean energy fuels.

ETFs Rebound in First Quarter

When you think of spring, one may conjure images of flowers growing, but what about the growth of your exchange traded funds (ETFs)?  As companies are reporting first quarter earnings, Rudy Martin of TheStreet.com reviews ETFs for the first quarter. 

Although there was a bit of a scare coming from China mid-quarter, Asian markets rebounded nicely. iShares MSCI Singapore (EWS) was up 10.5% for the quarter, with a healthy economy.  iShares MSCI Malaysia (EWM) returned 19% for the first three months of 2007, as the country works toward becoming an economic hub.  iShares MSCI Australia (EWA) saw 10.4% growth with banking, real estate, metals and mining boosting the economy.

In Europe, iShares MSCI Austria (EWO) grew 5.3% as it continues to be a hub for Eastern European commerce.  iShares MSCI Spain (EWP) rose 5% on its drive for growth, with the housing/building industry booming and Spaniards forgoing siesta to work harder and longer.

Asian ETFs Performing

As a whole, Asian markets continue to beat the S&P 500, with some weakness from China and Taiwan exchange traded funds(ETFs). This was mostly due to their closed markets last week for the Chinese New Year. iShares MSCI Australia (EWA) has been a leading Asian ETFs up 9.4% year-to-date, spurred by the renewed strength in gold, reports Steve Towns for Seeking Alpha. iShares MSCI Malaysia (EWM) and iShares MSCI Singapore (EWS) have been performing well this year as well, up 21% and 12% respectively.  iShares FTSE/Xinhua China 25 (FXI) was a top performer last year, and is down 5.4% year-to-date. The question still remains "Is China a bubble that we should exit?"

For full disclosure, some of Tom Lydon's clients own EWS and EWM.

Malaysia ETF Moving Upward?

Malaysia experienced new development plans in 2006, which also helped the Malaysian exchange traded fund (ETF).  The country relaunched the Ninth Malaysia Plan, which is a five-year plan that is designed to move Malaysia's economy up the value chain.  Increased spending on education, manufacturing  and value-added industries, along with agriculture and technology are part of the plan, states Oxford Business Group.

Malaysia also plans to develop certain areas into economic hubs comparable to Hong Kong or Shenzhen. Industrial production soared in November, due to an 8% contraction in October. The low numbers in October were a result of fewer working days due to the high number of Muslim holidays, reports Stephanie Phang and Patricia Chua for Bloomberg.com.

Additionally, the U.S. is seeing "real interest" in a trade agreement with Malaysia, after going into the fourth round of negotiations. The press release states deals will need to be forged by April. Look into the ETF iShares MSCI Malaysia (EWM) , up 2% this year, and up 34% in 2006.

For full disclosure, Tom Lydon's client's own EWM.