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.

The Asian Tiger ETFs Aren't Roaring As Loud

Many Asian-country focused exchange traded funds (ETFs) are giving back their 2007 gains. Are the Asian tigers of 2007 going to become the sleeping tigers of 2008?

A standout such as iShares MSCI Singapore (EWS) has given back much of  2007 gains all during the first quarter of 2008, says Gary Gordon for ETFExpert.

iShares Xinhua China 25 Index (FXI) finished 35% off its highs last Friday, giving back 50% of its 2008 gains, within 14 days, and Gordon reminds us that a 35% loss requires a 50% gain to get back to your starting gate.

One tiger remains standing, however: The iShares MSCI Taiwan Index (EWT) is still up 14% over the same time period. It's quite a turnaround for the fund. In 2007, it gained only 3.8%. So far this year, it's up 11.5%, leaving other Asian countries in the dust.

If you believe that the Asian markets are merely in a slump and will eventually make a turnaround, Gordon suggests getting a little more diversification across Asia with funds such as iShares S&P Asia 50 Index (AIA), which invests in the top 50 companies from the leading tigers: Taiwan, Singapore, South Korea and Hong Kong. Taiwan is the only single Asian country outperforming the fund at the moment, which is down 6.2% year-to-date.

Another diversified fund is the BLDRS Asia 50 ADR Index (ADRA), which is down 9.3% year-to-date.

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

Barclays Throws Hat Into Foreign Currency ETN Ring

Barclays Global Investors is set to roll out three new exchange traded notes (ETNs) that will track currencies in Asia, the Middle East and emerging markets. The ETNs have already acquired $150 million during the month ahead of their launch.

Jesse Emspak for Investor's Business Daily says the new ETNs are:

• Asian and Gulf Revaluation: This tracks an index Middle Eastern and Asian currencies tied to the U.S. dollar. Included are the yuan, Hong Kong dollar, Saudi Arabian riyal, Singapore dollar, and United Arab Emirates dirham.
• Global Emerging Markets Strategy: Tracks 15 emerging markets countries' currencies, including Asia, Latin America and Eastern Europe, through money markets.
• Intelligent Carry Index ETN: Follows the 10 most liquid currencies in the world, designed to give market-neutral returns.

These ETNs are just in time to join two other currency ETNs that have recently launched: Market Vectors Indian Rupee (INR) and Market Vectors Chinese Renminbi (CNY). CurrencyShares by Rydex was the first to cover currency through exchange traded products.

Bear in mind, the IRS has done away with the tax breaks on foreign currency ETNs. A ruling on other types of ETNs is awaited sometime this year.

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

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%

Sector Rotation In A Global ETF Portfolio

  Adapting your investment strategy with exchange traded funds (ETFs) is important when economies around the world are becoming more interrelated.

Doing so will add value and increase the chance of outperforming benchmarks, reports  Carl Delfeld for Index Universe. The wheres of a company is also becoming less important as the industries and sectors which it operates is taking center stage.

The basics of global indexing, says Delfeld, are take the S&P Global 1200, a composite of seven indexes that represent leaders in their respective regions. The market values of the 1200 companies in the indexes represent around 70% of the world's capital markets with a market value of $28 trillion or more. Here is a brief breakdown:

• The S&P 500 covers 75% of U.S. markets.
• The S&P Europe 350 covers 70% of the region's market cap across 17 countries.
• S&P/TOPIX 150 covers 70% of the Japanese market.
• S&P/TSX 60 offers exposure to 60 large-cap, liquid Canadian companies.
• S&P/ASX All Australian 50 is comprised of 50 liquid, domestic-oriented Australian companies.
• S&P Asia 50 covers 50 leading companies in Asia ex-Japan domiciled in Hong Kong, South Korea, Taiwan and Singapore.
• S&P Latin America 40 is a basket of 40 companies from Argentina, Brazil, Chile and Mexico which offers exposure to 70% of the regions' market cap. It is heavily weighted to Brazil and Mexico.

By using a top-down macro analysis of studying market-cap global sector weightings, a global sector rotation method can be useful in a growth portfolio. The weakness is that smaller countries get less weighting, and the traditional market-cap weighting which gives trademark exposure to emerging markets.

Five Global Safe Havens for Risk-Averse ETF Investors

For risk-averse investors, there are still ways to gain exposure to foreign markets with exchange traded funds (ETFs) and minimizing the homework involved with single stock-picking.

Todd Wenning for The Motley Fool points out The Economist's list of the most risk-averse countries, where global operational risk is lower. Criteria studied involved economic, government and systemic factors. Based on that, the publication came up with: Switzerland, Denmark, Finland, Sweden and Singapore.

Interesting: the United States ranked 25th on the list, behind Cyprus and Estonia.

For an all-in-one diversification investment tool, ETFs in foreign developed markets of interest are:

• iShares MSCI EAFE (EFA)
• Vanguard Europe Pacific ETF (VEA)
• iShares MSCI Sweden (SWE)
• iShares MSCI Singaopre (EWS)

The fact that a country or company is operationally safe doesn't make it a definite "buy," though. This information is merely a starting point, and it's a good idea to do your own homework.

It should also be noted that these countries are developed markets, so the growth potential within them isn't the same as it would be in emerging economies.

Global Exchanges And ETFs Remain Abuzz

Many country-specific exchange traded funds (ETFs) had a heyday in 2007, rising 70% to record trading volumes.

This year, the Dow Jones Global Exchanges tell a different story as the index has so far lost 15% this year, according to Carl Delfeld for ETFxray.

Jump starts and the like aren't turning these funds over, as evidenced by Deutsche Borse, which announced a tax break that would enhance this year's earnings by an estimated 10%. Its shares have remained flat.

Recently, global exchange shares have rallied, attracting investors because it is a fixed-cost business. Opportunities may be knocking in high-quality countries such as iShares MSCI Singapore (EWS) or the Netherlands (EWN).

The global exchange market remains alive with mergers and consolidation activity, which can give good price support, but be careful: valuations of exchanges is murky and tricky.

Private-Banking Assets in Singapore Could Lift ETF

If the assets keep flowing into Singapore's private banking accounts, perhaps its exchange traded fund (ETF) could see some good times ahead, too.

According to Assif Shameen for Barron's, if things keep up the pace, it could soon pass Switzerland as the world's largest private-banking center. Singapore is attractive because of Asia's stringent secrecy laws and favorable taxes, and the 30,000 new millionaires in China each year are looking for a place to stash their money.

That being said, Singapore has a ways to go: it has 6% of worldwide private-banking assets, while Switzerland has 18%. However, Switzerland's private-banking business is experiencing single-digit growth and Singapore's is expected to grow 30% this year.

Eli Hoffmann for Seeking Alpha reports on a few ways to get in on Singapore's economy. Citigroup (C) is leading the charge in tapping the Asian wealth, followed by UBS (UBS), Credit Suisse (CS), HSBC (HBC) and Merrill Lynch (MER).

The iShares MSCI Singapore (EWS) and the closed-end fund, Singapore Fund (SGF), offer investors exposure to the broader Singaporean economy, which appears to be on the upswing.

South Korea's ETF Market Has Strong Showing in 2007

The exchange traded fund (ETF) market showed growth in varying degrees all over the world in 2007.

Korea saw impressive change, reports Park Hyong-ki of the Korea Times. There, the net assets grew 55% to $2.6 billion and they nearly doubled the number of ETFs listed from 12 in 2006 to 21 at the end of last year.

What's next for the Korea Exchange (KRX)? It plans to list even more ETFs that track socially responsible and fundamentally sound companies, as well as index funds overseas. The goal is to list as many as 50 funds by 2010.

Singapore's growth wasn't chopped liver: the number of assets in ETFs grew by 113%, to $1.8 billion. Japan's growth was the slowest, at 2%. The United States remains the biggest market for ETFs, followed by Europe.

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!

Singapore's ETF, the Next Frontier

Foreign stock markets have experienced lavish returns and with the sinking U.S. dollar, global exchange traded funds (ETFs) are gaining American investment capital. Performance is what investors want, and global ETFs show an impressive 17% annual return, more than double the 8.2% that American ETFs are exhibiting, reports Dan Dorfman for the New York Sun. One expert believes that Asian markets are growing while European markets are cooling. So which country should you choose?

One option is Singapore, "the Switzerland and financial capital of Asia." The economy is on a growth spurt with a gross domestic product growth of 7.9%. Its inflation is low at 0.7% and the unemployment rate is at 2.8% for the 4.6 million population. Singapore has a high standard of living, and the literacy rate is at 95%. iShares MSCI Singapore Index (EWS) can help you harness this growth. Currently, it's up 39.5% year-to-date. The ETF basket has some of Singapore's largest blue-chip companies. Seventy percent is weighted within the 10 largest holdings, which are banking and financial. But don't forget about the "Chinese bubble." If it should burst, Singapore could go down with it.

Singapore ETF Gives Back Strong Returns

Singapore's exchange traded fund (ETF) has been one of the top performers so far this year. iShares Singapore Index Fund (EWS) is currently up 37.6% year-to-date and has returned an average of 31% per year since 2002. That means a $1,000 investment is worth $3,860 today, reports Todd Wenning for The Motley Fool. This ETF's top holdings include Singapore Telecommunications and United Overseas Bank, and more than 75% of the fund is invested in financial and industrial stocks. According to the "The Economist," Singapore's GDP grew at 9.4% during the third quarter, with expected growth to round out at 7% for the year.

Singapore has a highly-developed and successful free-market model economy. The environment is corruption-free with stable prices and and per capita GDP equivalent to the four largest Western European countries. The economy depends heavily on exports, particularly in consumer electronics and information technology products, according to the CIA World Factbook.

Singapore's Prosperous Economy Reflected in Its ETF

Singapore's exchange traded fund (ETF) iShares MSCI Singapore Index (EWS) is up 19.3% year-to-date. It could see increases as the country's economy is likely to grow 7.5% in 2007 from strong expansion in the financial services and construction sectors, according to a quarterly central bank survey. In addition, economists are optimistic about manufacturing being a central driving force, the Associated Press reports.

Singapore already has one of the world's highest per capita incomes and high-quality public services that have attracted lots of global labor. Foreigners comprise about one-fifth of its 4.5 million residents, reports Seth Mydans and Wayne Arnold for The Herald Tribune. Singapore's leaders aren't modest about their achievements either: Lee Kuan Yew, Singapore's elder statesman, has declared the country is entering "a golden age," says Carl Delfeld for ETF XRAY.

It should come as no surprise that Singapore is embracing ETFs. In fact, I'm scheduled to speak at the Index & ETF Investments Asia 2008 conference in February. It's the only Asian conference that addresses the opportunities and challenges of ETFs. Some of the topics that will be covered include:

• Hot sectors in Asia
• Launching, structuring and marketing a successful index and ETF within Asia

More on Singapore and Its ETF (EWS)

As Singapore's economy flourishes, its exchange traded fund (ETF) iShares MSCI Singapore Index (EWS) feeds off the success. In fact, Singapore has the second-largest economy after Brunei in the Asia-Pacific region and is behind only Hong Kong and Taiwan in terms of economic well-being, says Preciosa Dumlao for AHN.

One explanation for Singapore's economic growth is its location, as we previously mentioned. In addition, the country's real estate market is in a "sweet spot," reports Carl Delfeld for ETF XRAY. Rising incomes, low interest rates and smaller deposit requirements have brought a wave of first-time buyers to Singapore, making it a property development dream, according to the Financial Times. The soaring demand for apartments and offices that caused an increase in construction helped the economy to grow at its fastest pace in two years, says Shamim Adam for Bloomberg.

When combined, all these factors - and more - have made the Singapore ETF a solid performer. EWS held up against the United State's market drop last week, never falling below its long-term trend line. It's up 20.1% 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. 

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).

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.

Top Performing ETFs for 2006

Once again, global exchange traded funds (ETFs) were the top performers for 2006. 

Booming economic growth in China helped push the China ETFs to the number one and two spots for the year.  iShares FTSE/Xinhua China 25 Index (FXI) and PowerShares Golden Dragon Halter USX China (PGJ) were up 81% and 51% respectively.  Part of the growth in China is due to cargo - manufactured goods need to move throughout, in and out of the country; construction - infrastructure needs to be built; and consumers, also known as chuppies - consumption of high end goods is the current trend.

On the other side of the globe, Spain was one of the fastest growing economies in Europe, due to a wave of mergers and acquisitions, a surge in construction and a real estate boom.  All factors helped boost iShares MSCI Spain (EWP) ending the year up 48%.

Back in Asia, doing business with your neighbor certainly can be a plus, as it was for Singapore.  The country has the the world's busiest port and enjoys a healthy economy.  iShares MSCI Singapore (EWS) represents the region and was up 43% for the year.

Mexico made the top performing list last year and does so again in 2006.  iShares MSCI Mexico (EWW) was up another 43% this year.  Even with uncertain election results for part of the year, the Mexican economy boomed with abundant trade and infrastructure development.

Since China took up the top two spots we thought we would include number six, iShares MSCI Sweden (EWD), up 42%.  Sweden's economy was strong this year, even with an election this past fall.  The ETF has a bit of exposure to financial service companies, which were key performers for the year.

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

China Neighbors' ETFs Provide Investment Opportunities

There is nothing wrong with using exchange traded funds (ETFs) to invest in a growing market.  China is a big, growing, country and the iShares FTSE/Xinhua China (FXI) is up 60% for the year and PowerShares Golden Dragon USX China (PGJ) is up 40%.  But sometimes it doesn't hurt to look at the surrounding areas.

Direct investment in China is difficult and China's stock exchanges don't always meet the standards of transparency that investors from other nations like to see.  China's neighbors have found ways to do business in the country and are doing quite well, according to Donald H.Gold of Investor's Business Daily.

The top companies in iShares MSCI Singapore Index (EWS) do business with mainland China and none trade on a U.S. exchange.  The holdings include banks, oil rig builder and telecommunications.  The ETF is up 41% for the year.  Besides business with China, Singapore has a healthy economy.

Hong Kong is another neighbor who has done well by doing business in China.  iShares MSCI Hong Kong (EWH) is diverse, as top holdings include a telecom, conglomerate, real estate developer, power generator and bank.  EWH is up 24%.

The other close neighbor, Taiwan, is represented with the iShares MSCI Taiwan (EWT) ETF.  While this ETF is not as diverse as the others, 58% of the fund is devoted to technology, it is up 14% for the year.

For full disclosure, FXI is held in some of Tom Lydon's client accounts.

Emerging Market ETF Investing

Exchange traded funds (ETFs) have made investing abroad more comfortable. Looking at one-year performance, most of the top ten ETFs are emerging markets.  They include iShares MSCI Mexico (EWW), iShares MSCI Austria (EWO), iShares MSCI Brazil (EWZ) and iShares MSCI Singapore (EWS).

We talked to Donald Gold of Investor's Business Daily about how investors should know what they're getting into; during challenging times, foreign ETFs are more volatile. Investing abroad doesn't ensure protection from a weak U.S. market, and a foreign markets' decline will be harder than ours. To protect against steep losses you should sell out if an ETF breaks below its 200-day moving average or falls 8% from its peak, whichever comes first.

It's wise to check an ETFs top holdings. Just because it says "China", it might not offer the diversification you're looking for. For example, iShares FTSE/Xinhua China 25 Index(FXI) represents the 25 biggest Chinese companies listed on London's Financial Times Stock Index.

Singapore ETF (EWS) Moves With Healthy Economy

With a healthy economy and the world's busiest port, Singapore looks appealing.  Investors who are interested in exposure to the country can look at the exchange traded fund, iShares MSCI Singapore (EWS).  The ETF is up 8% over the past month and reached a new high yesterday.  Sam Patel of TheStreet.com notes that the ETF is highly concentrated in its top ten holdings.  The banking sector represents 35% of the ETF, followed by capital goods and telecommunications.

Singapore has a budget surplus equal to 6% of its GDP, has the highest standard of living in Asia, 8% GDP growth and is a gateway for commerce in Asia.

South East Asia ETF Opportunities

Carl Delfeld looks at the largest and smallest companies in emerging markets and his conclusion is to use exchange traded funds as well as closed ended funds to buy into South East Asia.

Of course the top companies on the list were from China, India and Brazil, the countries you hear most about.  But looking at the smallest companies, Delfeld sees potential in countries such as Thailand and Indonesia.  Thailand is one of the cheapest markets in the world and it is up 10.5% so far this year.  Indonesia is Asia's best performing market, up 27% for the year.

To take advantage of these emerging markets, investors can look at the Thai Fund () and the Indonesian Fund (), both close ended funds.  For ETFs, there are high-quality markets like iShares MSCI Singapore (EWS), iShares MSCI Australia (EWA) and iShares MSCI Hong Kong (EWH).

Singapore ETF is Current Jewel

iShares Singapore (EWS) deserves some attention.

Larry Edelson from Weiss Research suggest Singapore’s economy is one of the crown jewels of Asia:

• Singapore’s GDP rose 8.5% in the first quarter of 2006.
• Manufacturing gained 13.8%.
• Exports were up 12.5%.
• Retail sales increased 12.3%.
• Per-capita GDP is nearly $30,000 per year, second only to Japan.

Roger Nusbaum from theStreet.com points out that the largest sector weight in EWS is the financial sector, at 35%, and three of the fund's four largest holdings are financial stocks. The heavy weighting in financials contributes to EWS' 3.2% dividend yield.

Singapore ETF (EWS) Poised For Growth

iShares MSCI Singapore (EWS) has declined 7% in the last 10 trading days. Like most world markets, the recent sell-off hasn't been pleasant. But this too will end and when it does, Singapore is worthy of consideration.

Murray Coleman of Investors Business Daily points out some of the advantages of investing in Singapore. With nine consecutive quarters of GDP growth, Singapore is positioned well to continue to participate in China's expansion as a major supplier.

Singapore ETF (EWS) Should Advance On Key Economic Data

The Associated Press reported that Singapore's economy will grow at 5.9 percent in 2006, at the top end of a government forecast, but slower than last year's 6.4 percent pace, according to a quarterly central bank survey of economists published Friday.

The growth forecast for 2006 is higher than the 5 percent projection made in the December survey after the economy grew at a faster-than-expected 8.7 percent in the last quarter, the central bank said. The latest forecast, based on expectations that global demand for key electronics will remain strong this year, is also at the upper end of the government's official forecast range of 4 percent to 6 percent.

iShares MSCI Singapore Index (EWS) has recently hit new highs. DBS Group Holdings Ltd., Singapore Telecommunications Ltd. and United Overseas Bank Ltd make up over one third of the holdings in the fund.