South Korea's ETF Boosted By Retail Numbers

South Korea's exchange traded fund (ETF) shot up a nice 3% in trading yesterday, possibly owing in part to expanding department store sales.

They expanded for the fourth consecutive month, reports Seyoon Kim for Bloomberg. Consumers snatched up luxury items, clothes and food, which sent sales up 6.5% from a year earlier. March sales rose 6.7%.

One of those stores, Shinsegae, is 2% of the iShares MSCI South Korea (EWY). Year-to-date it's down 10%. The consumer goods sector makes up 26% of the fund.

On the flip side is that the country's vice finance minister said the economy is in a downturn much like the rest of the world. The jobless rate rose to a five-month high in April as manufacturers, builders and retailers let workers go. This could be an indication that department store sales may cool.

Britain's biggest retailer is planning to purchase 36 discount stores from South Korea's E-Land for $1.9 billion, report Rhee So-eui and Rachel Sanderson for Reuters. This acquisition could challenge Shinsegae, which runs the top-ranked E-Mart chain.

The country is Tesco's second most profitable market after Britain, and this expansion might be seen as a sign that Tesco has faith in the strength of the South Korean economy.

Foreign Currency ETF Offerings to Pour In Next Month

Exchange traded fund (ETF) providers Dreyfus and WisdomTree are teaming up to offer five actively managed foreign currency ETFs next month.

They will include the WisdomTree Dreyfus Euro Fund, Japanese Yen Fund, Indian Rupee Fund, Chinese Yuan Fund and the Brazilian Real Fund. These will be the first of 12 to be launched under the WisdomTree Dreyfus banner. Two others include two U.S. current income funds, reports Mariana Lemann for Ignites.

Later this year, more funds will launch and cover the Australian dollar, British Pound sterling, Canadian dollar, New Zealand dollar, South African rand and South Korean won. Several of these funds will be a first in currency ETFs.

When they launch, they'll join a growing lineup of both currency ETFs and exchange traded notes (ETNs), including:

• CurrencyShares Euro Trust (FXE)
• CurrencyShares Japanese Yen Trust (FXY)
• Market Vectors Indian Rupee (INR)
• Market Vectors Chinese Renminbi (CNY)
• PowerShares DB G10 Currency Harvest (DBV)

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

South Korea's ETF Hit By Samsung Head's Troubles

Samsung's chairman is in hot water, and it's weighing on South Korea's exchange traded fund (ETF), which counts the company as a major component.

Chairman Lee Jun-hee was indicted on tax evasion and breach of trust charges, reports Jae-Soon Chang for the Associated Press. However, tycoons in South Korea are considered "indispensable," so prosecutors chose not to arrest him, saying it would cause "enormous disruptions" to Samsung's corporate management and impact the economy.

Samsung is particularly important to South Korea's economy: it employs about 250,000 people in 60 businesses, and its sales make up almost one-fifth of the country's gross domestic product.

Lee has hinted that he might step down.

iShares MSCI South Korea (EWY) is down 9.2% year-to-date. Samsung is the fund's largest component, with 15.3% of assets.

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.

South Korean ETF Positioned To Benefit From Capital Act

South Korea and its related exchange traded fund (ETF) are constrained by an over-regulated financial sector.

This may be causing the iShares MSCI South Korea (EWY) ETF to have a trading pattern that looks a lot like Japan's, reports Carl Delfeld for Forbes. The ETF's top three holdings are Samsung, Posco and Kookmin Bank. They are facing many obstacles, and make up for 30% of the fund's holdings.

But last year, the "Capital Markets Integration Act" came into effect and could be a start for a reform. South Korea's banking sector was liberalized a decade ago. However, many financial markets are off-limits to foreign institutions. In an effort to become more of a regional financial services hub, legislation is aimed at keeping up with competitors, as outlined in the act.

The biggest change in the act will be in full force by January 2009: financial groups may do anything that is not expressly prohibited. Some have been comparing the changes to London's "big bang" 20 years ago, in which the complete structure of the market was altered because of rules changes.

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.

WisdomTree Could Launch Money Market ETFs

WisdomTree filed for 12 new money market exchange traded funds (ETFs) to cover 17 different foreign and emerging markets. The new funds are similar to the Rydex CurrencyShares funds with two major differences:  (1) They cover many new global markets, and (2) They are money market funds.

Murray Coleman for Index Universe on Seeking Alpha reports that the total number of currency funds available will be 17, representing currencies from almost every major market in the world. Several currencies will be accessible by investors for the first time, including the Brazilian real, Chinese yuan and the South African rand.

Another addition from WisdomTree includes the WisdomTree Developing Markets Fund which proposes to make short-term investments in money market instruments from 10 emerging markets: Brazil, Chile, China, Czech Republic, Hungary, India, Poland, South Korea, Taiwan, and Turkey. This fund is also being titled actively managed, with an average maturity of around 60-90 days.

This will allow investors to put their money in an investment outside the U.S. in a liquid and safe environment.

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

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.

Samsung Investigated, South Korea ETF Could Be Affected

South Korea's Samsung Group is under the microscope, and an exchange traded fund (ETF) with its electronics division as one of its top holdings could feel the impact.

The Associated Press says that South Korea's president appointed an independent counsel to take a look at slush fund and bribery allegations against Samsung. Also under investigation will be whether the country's president received money from the company before and after the 2002 election. The counsel has up to 125 days to complete the probe.

Samsung Electronics makes up 13.4% of the iShares MSCI South Korea Index (EWY). EWY is up 28.3% year-to-date.

South Korea ETF Riding On Upcoming Presidential Election

The South Korean economy and exchange traded fund (ETF) are at the mercy of the upcoming presidential election. Mr.Lee Myung-bak, the former mayor of Seoul, Korea, is most likely to win the upcoming South Korean election on December 19. Carl Delfeld for ETFXRAY reports that his agenda is pro-business, and includes tax-cutting, which is great for their stock market.

The country is facing an unsettling and dull outlook for economic prospects. It lacks the confidence and security to embrace a market economy. The country's growth rate has fallen some to 4.5%. Faster growing countries such as Brazil and India have pushed the country out from the 11th slot to the 13th.

iShares MSCI South Korea (EWY) roughly mirrors the stock market capitalization, with Samsung, POSCO, KEPCO, and SK Telecom making up around 50%. EWY is up 25% year-to-date.

Investors and ETFs Seek Shelter From the Storm

The sub-prime and credit mess has led to money being pulled out of exchange traded funds (ETFs) and instead taking shelter in money market funds, reports Carl Delfeld of ETF XRAY.

EPFR Global, which tracks net investment flows by the world's biggest equity managers, says all of the major equity funds and ETFs posted net outflows for the week ending November 14. Equity funds in emerging markets had $5.58 billion pulled out, while $5.07 billion was pulled out of developed markets.

If investors were leaving their money in emerging markets, they tended to favor the larger economies. Net inflows to Brazil, Korea, China and Russia totaled $878 million. The BRIC funds took in an additional $480.6 million.

On the flip side, money market funds took in $10.1 billion. That brings the net inflows since the beginning of August past $100 billion.

All Eyes Are On South Korea Election and the ETF

The effects of the upcoming presidential elections in South Korea on the country's exchange traded fund (ETF) remains to be seen. iShares MSCI South Korea Index (EWY) is up 37.8% year to date -- will it be able to continue the climb?

The front-runner in the contest is already calling for North Korea to dismantle its nuclear weapons program, reports the Associated Press. Lee Myung-bak says that if the North dumps the program, South Koreans could invest in the country. If this happens, it could mean good things are in store for the region.

The presidential election must be a big deal, though -- John Herkovitz of Reuters says the politicians are raising the dead for the occasion. That's because most South Koreans  believe that where a person's ancestors are buried determines one's fortunes and destiny. It seems that some ancestors are in dire need of a change of address.

South Korea ETF Affected By Samsung's Shadiness?

iShares MSCI South Korea Index (EWY), the South Korean-focused exchange traded fund (ETF), may fall victim to allegation of bribery at Samsung. A broad coalition of liberal lawmakers are calling on individual counsel to investigate snowballing allegations of bribery at Samsung Group, Asia's electronic giant. Samsung Group is being accused of using slush fund money to bribe prosecutors, judges, government officials and journalists, according to the Associated Press.

Samsung has fully denied any claims. This investigation is followed by the filing of a criminal lawsuit last week by two civic groups against three top Samsung executives. For decades, South Korean conglomerates have been accused of dubious dealings between subsidiaries and affiliates to help controlling families evade taxes and secretly transfer wealth through a complex ownership structure.

EWY is up 41.1% year-to-date and Samsung Electronics is a top holding at 11.8%.

South Korea ETF Makes Its Mark In The World

The valuation of South Korea's stock market is compelling and an exchange traded fund (ETF) can give you diversified exposure. Amidst the recent bull market, the KOPSI Index is selling at 15.5 times this year's earnings, a valuation that fares well with 19 times in Indonesia, 24 for India, and in the 50s for China. Jeremy Siegel for Yahoo Personal Finance reports that the country is far from what it looked like in 1998 when the Asian economic crisis spread from South Asia to Korea. Korean stocks now have a valuation above $1 trillion. The won is strong and the Korean stock market has grown tenfold.

The country is currently at a fork in the road, and it's aging quicker than the U.S. and the fertility rate, at 1.2, rivals Japan's for being the lowest in the world. Geopolitical risk looms with the North and South division, with a potential to reunite in the future. Korea's manufacturing is being pressed by cheap labor in China and to achieve economic success, Seoul must re-train foreign-educated students to make their mark in Korea. Korea's greatest resource is its people, who are highly educated and motivated. iShares MSCI South Korea Index (EWY) will give good exposure to this country in the world market.

Investing in South Korea with ETFs

When investing in exchange traded funds (ETFs), especially country-specific ETFs, it is important to know what is going on in that country. While iShares MSCI South Korea Fund (EWY) gives one of the lowest price-to-earnings growth ratios around, there are other things to take into consideration.  Gary Gordon of ETFExpert also points out that with EWY, you are getting emerging-market type GDP from a technologically advanced and finely tuned "Asian Tiger". South Korea is considered a developed country by Dow Jones Indexes, but is still considered emerging on other indexes (it is on their watch list to be found fully emerged).

EWY's top holding, Samsung now has a larger market cap than the giant opponent Sony.  Investors should note EWY is a highly concentrated ETF, with 50% focused on the top 5 holdings. Around 25% of the ETF relies on the movement of Samsung. We should not forget about the ever-looming threat of Kim Jong's missile tests and his middle-eastern-like tyranny regime.

If you want exposure to South Korea without the direct risk, there is iShares MSCI Emerging Market Fund (EEM). South Korean stocks make up 15% of the holdings and EEM helps dodge the single-country risk.  EWY is up 51.4% year-to-date and EEM is up 46.0%.

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

5 ETFs with Winning Streaks

Now that the five-year bull market is showing signs of distress, investors might be curious about some exchange traded funds (ETFs) that are on a winning streak. Richard Widows for TheStreet.com reports that none of the 19 ETFs with a strong track history will be able to boast a 10-year winning streak at the end of the year. The same is true for eight-year streaks for the 33 ETFs around at the end of 1999.

A search for the ETFs with positive returns over the last five years in addition to the first three calender quarters of 2007 were found in TheStreet.com Ratings database, they include:

• iShares MSCI South Korea Index Fund (EWY) - EWY has produced positive results for its holders every complete calendar year since its inception in May of 2000. Currently, it's up 41.6% year-to-date.
• iShares MSCI Austria Index Fund (EWO) - EWO has produced market gains every calendar year beginning with 2002. Currently, it's up 6.8% year-to-date.

The last three of the five ETFs with winning streaks produced positive consecutive calender year results since 2002 but have fallen into the red as of January this year. All invest in real estate:

• iShares Dow Jones U.S. Real Estate ETF (IYR) - IYR has been up every year beginning with 2001, but year-to-date it's down 7.9%.
• iShares Cohen and Steers Realty Major ETD (ICF) - ICF has has had consecutive positive years starting in 2002, but year-to-date it's down 5.9%.
• Dow Jones Wilshire REIT ETF (RWR) - RWR has been up every calendar year since 2002, but year-to-date it's down 6.2%.

What's Going on with South Korea's ETF?

South Korea's exchange traded fund (ETF) iShares MSCI South Korea Index (EWY) has been a superstar this year. Currently, it's up 45.8% year-to-date.

Although EWY is still doing well, its largest holding Samsung reported that its quarterly profits were down compared to last year. Samsung currently makes up 13.1% of EWY as opposed to the 40% that it used to. Samsung, which is the world's top memory chip maker, said its profits were flat from last year as sluggish computer memory chip prices offset high sales of flat screens, Reuters reports. This caused its shares to rise a minor 1.6% compared to the broader market's 11.6% rise in the third quarter. This news, in combination with South Korea's other concerns, has investors watching EWY.

South Korea ETF Still Strong Despite Export Decline

South Korea's exchange traded fund (ETF) iShares MSCI South Korea Index (EWY) has been a top performing ETF this year. Currently, it's up 43% year-to-date. Since EWY has been doing so well, many investors wonder if it's still inexpensive enough to justify buying it. Carl Delfeld for ETF XRAY thinks so. He says Korea trades at a 24% discount to the region on a price-to-book value basis.

However, there are some reasons to be apprehensive about investing in EWY and Asia's third largest economy. The biggest concern is that lately the country has become increasingly volatile. Rules are changed retrospectively, and tax treaties are ignored, the Financial Times reports. In addition, South Korea recently reported an unexpected fall in its September exports. The Bank of Korea announced it would closely watch currency movements, as the won rose to a two-month high. Its increase reflects growing anxiety that a strong currency would hurt the country's export competitiveness, reports Cheon Jong-woo and Yoo Choonsik for Reuters.

The World, According to FTSE

Recently, the Financial Times and the London Stock Exchange (FTSE)announced the results of its annual review of country classifications. As the countries' status changes, the holdings of emerging-market exchange traded funds (ETFs) could also change. The major indexes have different systems for classifying countries by stages of development. FTSE uses a three-tier system of classification that includes "developed," "advanced emerging and "secondary emerging" designations, according to Index Universe staff. The FTSE also updated its Watch List, which tracks countries that have a reasonable likelihood of a status change. Countries under review are:

• Israel
  Israel will become elevated to a developed market in June of 2008. It has been on the Watch List since 2006. Dow Jones and Russell Indexes both classify it as developed, while the S&P and MSCI give it emerging status.
• Hungary and Poland
  Both countries have been upgraded to advanced emerging markets. Although they meet quality-of-markets criteria for developed status, they must reach a per capita rating of "high" from the World Bank. However, other major indexes have designated these countries as just emerging.
• Pakistan
  The FTSE has removed this country because it no longer meets minimum requirements.
• Greece
  Also on the Watch List, this country is in danger of a downgrade from developed to emerging advanced. Current rules and conditions make it difficult for foreign investors to invest in the market, according to FTSE. Other major index providers classify this as a developed market. Greece also has made news as it is about to get its first ETF.
• Taiwan, South Korea
  These two countries are on the verge of becoming promoted to developed status from the advanced emerging rank. The Russell, MSCI and S&P Indexes all classify these as emerging countries, while the Dow Jones has them labeled as developed.
• China
  China's A-shares market is on the Watch List although its stock market is untouchable by foreign investors. Two criteria must be met to be included in the FTSE GEIS: 1) substantial expansion of the Qualified Foreign Institutional Investor and 2) removal of restrictions on foreign investment.

South Korea's ETF Unlikely to Suffer from U.S. Subprime Problems

South Korea's exchange traded fund (ETF) iShares MSCI South Korea Index (EWY) continues to thrive when many other markets are worried about a credit crunch. Currently, EWY is up 36.5% year-to-date.

Earlier this week, South Korea's vice finance minister said the U.S. subprime mortgage issues will have a limited impact on the country, because of their low exposure in Korean institutions, reports Kim Joo-young for Yonhap News. The vice finance minister also said that the U.S.'s interest rate cut could boost U.S. economic growth, which would help South Korea's exports, according to Korea.net.

Which Emerging-market ETF Is Right for You?

Emerging-market exchange traded funds (ETFs) have been popular lately because of their generally strong performance over the past few years. The great thing about emerging-market ETFs is that there is wide selection; almost every ETF provider offers one, as Gary Gordon for ETF Expert notes. Yet, with many choices comes responsibility; investors need to look at the options and see what, if any, meet their financial goals. One way to tell them apart is through their country holdings. Here's a comparison:

• Vanguard Emerging Markets Stock ETF (VWO)
  South Korea dominates this ETF at 15.1%. Taiwan is next at 12.4%, followed by Hong Kong at 10.9%, Brazil at 9.4% and South Africa at 7.6%. VWO is currently up 18.4% year-to-date.
• SPDR S&P Emerging markets (GMM)
  GMM is equally heavy in Brazil and Hong Kong at 12.0%. Next comes South Africa at 8.9%, Taiwan at 6.6% and India at 6.3%. Having launched in March, GMM is currently up 6.3% over the last three months.
• iShares MSCI Emerging Markets (EEM)
  South Korea also is the largest holding in EEM at 15.8%. However, it differs from VWO in its lower holdings. Hong Kong gets 12.2%, Brazil has 11.6%, Taiwan gets 9.6% and South Africa at 8.4%. EEM is up 14.2% year-to-date.
• WisdomTree Emerging Markets High-Yielding Equity Fund (DEM)
  This ETF invests a whopping 27.8% in Taiwan, followed by 11.3% in Brazil, 9.3% in Korea, 8.7% in South Africa and 8.2% in Thailand. DEM just launched in July, which was bad timing, so it's down 5.0% over the last month.

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

5 Top ETFs for the Year So Far

Even with the markets in turmoil lately, it doesn't hurt to stop and examine exchange traded funds' (ETFs) performance so far this year. In doing so, a few ETF all-stars emerge. Can you guess which ones make the top five, according to Jeffrey Ptak for Morningstar?

One of these ETFs is the Market Vectors Steel (SLX). It's up 29.3% year-to-date. SLX tracks the Amex Steel Index and comprises 33 steel-related stocks. This ETF is heavy in popular foreign holdings; they make up two-thirds of the fund. Other ETF leaders for the year include:

Emerging Market ETFs: Right or Wrong?

Many exchange traded funds (ETFs) give investors easy access to globalization. While there can be benefits to investing in emerging markets, there can be drawbacks as well. Walter Updegrave for CNN Money gives some of the pros and cons for this investment sector:

Wrong reasons to invest in emerging market ETFs:

• "Emerging markets have had amazing returns, so I should invest there." This school of thought is inaccurate because history shows that people generally jump in after the biggest gains already have been made.
• "The U.S. market is terrible, so I'm going to invest abroad." Investing in foreign shares as a safe money haven from a volatile U.S. market doesn't work. Because the U.S. market is so large, when it drops, it takes other major countries' markets down with it.
• Because emerging markets are easily influenced by their country's individual economy, politics, etc., they can turn downward quickly and sharply.
• When the emerging market ETFs are below their long-term trend line, it is better to wait for an upward trend.

Right reasons to invest in emerging market ETFs:

• They provide diversification for your portfolio.
• Over the long-term, U.S. and foreign markets don't parallel each other.
• When emerging markets are up, they're UP. South Korea and Brazil are excellent examples of this, as they've been the top performing ETFs year-to-date.
• Your portfolio can tolerate investing in higher risk ETFs.

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

Around the ETF World

As the international exchange traded fund (ETF) market expands, it's becoming a more popular area in which to invest. Asian country-based ETFs have been doing especially well because of strong labor markets. China's economy has been growing so fast and performing so well that it's had to tighten credit six times this year.

Europe has had some strong performers as well, namely Germany and Spain. Increased spending and falling unemployment has helped Germany's ETF do well. Spain's success can be partially attributed to Europe's economic prosperity. Carl Delfeld for ETF XRAY also commented on the global markets. Below are the ETFs and their performances year-to-date.

• iShares MSCI South Korea Index (EWY) - up 25.5%
• iShares FTSE/Xinhua China 25 Index (FXI) - up 16.9%
• PowerShares Golden Dragon Halter USX China (PGJ) - up 18.8%
• SPDR S&P China (GXC) - up 14.6% for the last three months (launched in March)
• iShares MSCI Germany Index (EWG) - up 16.9%
• iShares MSCI Spain Index (EWP) - up 9.2%

South Korean Kidnappings Affecting ETF (EWY)?

Although the South Korea exchange traded fund (ETF) iShares MSCI South Korea Index (EWY) has given a stellar performance lately, the recent tension between the country and the U.S. could be a factor in its recent decline.

On July 19, Taliban militants kidnapped 23 South Koreans in Afghanistan, according to Burt Herman for the Associated Press. The Taliban members demanded the release of other imprisoned Taliban militants in exchange for the hostages' release. Although two hostages have been killed already, the U.S. continues to stand by its decision to remain impartial. In turn, South Korea sees the U.S. as the only country capable of intervening and getting Afghanistan to meet the captors' demands. The U.S. lack of action has frustrated many South Koreans.

Perhaps as no coincidence, EWY's performance recently started to slide. It is down 6.6% for the week. As events unfold, EWY will be worth the watch.

ETFs That Can Benefit from the Dollar's Decline

With the dollar in decline, it could pay to invest in a variety of international and foreign currency exchange traded funds (ETFs). As we mentioned last week, there are several benefits abroad and reasons why the dollar continues to weaken, they include:

1. The U.S. economy is growing slower than many other countries' economies (such as South Korea, Brazil, Germany).
2. U.S. interest rates are at the status quo while other countries' interest rates are declining, according to Carl Delfeld of ETF EXRAY.
3. The U.S. housing market is kind of a mess and is not predicted to improve.

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

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.

Emerging Market ETF is the New Sample Platter

With so much growth in various emerging markets and their exchange traded funds (ETFs) around the world, how are you supposed to choose where to invest?

Consider the BLDRS Emerging Markets 50 ADR Index (ADRE); it has little of everything. Another bonus is that it's up 26.9% year-to-date. ADRE's top 10 holdings are from some of the best-performing emerging markets.

1. America Mobile (AMX) - makes up 5.7% of ADRE; Mexico
2. Taiwan Semiconductor Manufacturing (TSM) - makes up 5.3%; Taiwan
3. China Mobile (CHL) - makes up 4.8%; China
4. Petroleo Brasileiro (PBR) - makes up 4.4%; Brazil
5. Posco (PKX) - makes up 4.2%; South Korea
6. Companhia Vale Do Rio Doce - makes up 4.2%; Brazil
7. Kookmin Bank (KB) - makes up 3.8%; South Korea
8. Teva Pharmaceutical Industries (TEVA) - makes up 3.8%; Israel
9. Petroleo Brasileiro (PBR) - makes up 3.6%; Brazil
10. Infosys Technologies (INFY) - makes up 3.5%; India

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).

South Korean ETF Could Be the Next Energizer Bunny

The exchange traded fund (ETF) iShares MSCI South Korea Index (EWY) just keeps going and going. When we reported on it just last month, it was already up an impressive 22% for the year. Now, it's up 37% for the year and shows no signs of stopping.

What's causing the growth spurt this time?

One theory is that Moody's Investors Service put the South Korean government ratings on its list to be reviewed for a possible upgrade because of the country's diligence in fiscal prudence and positive large economic prospects, according to Polya Lesova of MarketWatch.

"Korea's favorable macroeconomic performance should continue over the near term," said Thomas Byrne, senior vice president at Moody's in a statement Tuesday. "Over the longer term, Korea's improved credit fundamentals reflect a renewed commitment to trade liberalization to boost potential economic growth."

With performances and predictions like this, EWY might be the next Energizer bunny.

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.

South Korea's New Act Affects ETF

The South Korean market and the exchange traded fund (ETF) that follows it already have been doing well this year; iShares MSCI South Korea (EWY) is up 22%. The Capital Markets Integration Act, which the South Korean national assembly is scheduled to ratify next week, is anticipated to make positive, radical changes to South Korea's finance sector, Carl Delfeld of ETF XRAY says.

The legislation is expected to create new fields in the finance industry, including banking, insurance and investment, as well as encourage creativity and consolidation, according to Anna Fifield of the Financial Times. The change also is expected to increase South Korea's ability to compete against China. Most importantly, financial institutions will have free reign to do anything that is not explicitly banned within the new act. For example, asset managers and brokerages will be able to develop new products and provide a wider array of services.

While financials make up 19% of this ETF, information technologies make up the most of EWY at 22%. Perhaps after this act, we may see the number of financials increase.

South Korean ETF Catching Up

After trailing other Asian markets over the past few years, the South Korean exchange traded fund (ETF) has been gaining ground thanks to Samsung Electronics.  Samsung has become Asia's largest tech company (by market cap) and makes up 15% of iShares MSCI South Korean (EWY), which is up 25% year-to-date.  Carl Delfeld for ETFXRAY.com explains the company might not a perfect play on the South Korean economy, as it has become more of a global player, growing more outside the country than in.  Other top companies in EWY include POSCO (8%), a materials company and Kookmin Bank at 7%.

South Korea ETF Strong on Economy

South Korea has not been a hot topic lately, but strong economic factors and an "extraordinary valuation opportunity", make the exchange traded fund (ETF) iShares MSCI South Korean Index Fund (EWY) an investment of interest.  EWY is up 10% since the late February fallout. Mark Hulbert for MarketWatch.com reports South Korean stocks are selling at a lower valuation than U.S. stocks due to the North Korean nuclear issue.  But, is the threat severe?  If you don't think so, then there could be an investment opportunity.

South Korea is the seventh largest trading partner with the U.S. and the eleventh largest economy in the world. The country moved to a market-oriented investment model away from the government-directed system. The economy grew 0.9% for the first quarter 2007, due to rising exports and a spike in consumer spending. Solid exports helped ease concerns of implications from a U.S. economic slowdown.  Seyoon Kim for Bloomberg.com states because consumption is strong, the economy is likely to grow at a faster rate during the second half of the year.

Negotiators recently announced the U.S. and South Korea are to create a free trade arena, symbolizing the most ambitious trade agreement America has finalized since NAFTA, a decade ago. According to The Economist, both governments agree it is a historic achievement for both sides.

Despite Political Problems, Korea (EWY) ETF Hits High

The South Korean exchange traded fund (ETF) hit a year-to-date high as political conflicts get worked out. A December presidential election has left some time to get political wrinkles ironed out and South Korean president Roh Moo Hyun has left the Uri party to help members settle conflict. Roh believes his departure will lead to a resolution between supporters and opponents of his party.

Kim Kyoungwha of Bloomberg.com reports the economy of $788 billion is expected to expand at 4.5% this year, the slowest in five years. A slowdown in consumer spending met with an overall global reduction for the country's exports are culprits. Look into the iShares MSCI South Korea Index (EWY).

South Korean ETF-What Is It Holding?

With Samsung (21%) as the biggest holding in the iShares MSCI South Korea Index (EWY) exchange traded fund (ETF), shareholders will be amazed to know that not only is Samsung one of the biggest employers, they could win the humanitarian award this year, too!

The update from Reuters reports the South Korean government is handing out gifts to office workers who promise not to visit brothels this holiday season. The Ministry of Gender Equality is offering to pay companies whose employees pledge not to buy sex after alcohol-soaked holiday parties. Prizes include movie tickets and a cash prize for the company that enlists the most employees, 1 million won ($1,077). Locals are bewildered by the plan and believe it's a waste of money.

ETF Trends - South Korea (EWY)

The easiest way to participate in the expansion in China is to buy ETFs in surrounding countries like Taiwan and South Korea. (Business Week) The iShares MSCI South Korean Index Fund (EWY) has gained close to 50% in the last 12 months.

The latest views put South Korea's corporate earnings growth at 13% this year, slightly better than analysts' consensus on the S&P 500. It trails Switzerland's 16.8% and Japan's 15.9%. (Investor's Business Daily)

Single Country ETFs On Fire!

ETFzone Trading Specialist, Jonathan Bernstein points out that single country ETFs have been on a fire the past two years. Many have appreciated over 50%! Some examples include:

• like iShares MSCI Mexico (EWW) and iShares MSCI Brazil (EWZ)
• iShares MSCI Japan (EWJ), iShares MSCI Korea (EWY), and iShares FTSE China 25 Index (FXI)
• iShares MSCI Sweden (EWD) and iShares MSCI Netherlands (EWN)
• iShares MSCI South Africa (EZA)

"Despite their recent strength,  they remain relatively lightly traded and for many investors even obscure. Any investor in these or other single country ETFs should keep in mind that these funds are volatile, with betas sometimes twice that of more diversified funds. Also because these funds offer exposure to foreign entities, all have significant currency exposure. These funds can be expected to do well when the dollar weakens. A strengthening dollar is negative for these funds"

Big Increases in South Korea Production and ETF

Good news came out of South Korea.  Factory output in November saw its biggest gain in six years, along with record exports and increased consumer spending.  "A third straight increase in production shows the economic environment is improving."  And the government says economic growth will accelerate to 5% in 2006 (estimated 3.9% for 2005).

Samsung and Hyundai are two companies enjoying the increased exports and the pick up in domestic spending.  Fourth quarter profits at Samsung are expected to exceed forecasts and Hyundai had the highest monthly car sales in two years.

Exchange traded funds offer a way to invest in South Korea, one such ETF is the iShares MSCI South Korea Index Fund (EWY).  It is up 53% for 2005.

Take a Look at South Korean ETF (EWY) as Bush and World Leaders Converge on South Korea

The annual Asia-Pacific Economic Cooperation Forum has given South Korea a chance to show off a little. It has become the third-largest economy in Asia after Japan and China, and enjoying gross domestic product growth of 4.4%.

Some feel the bloom may be off the rose, but you can't argue with the recent progress. "The top four companies make up 40% of the iShares MSCI South Korea Index (EWY) exchange traded fund, which is up 40% so far this year. Samsung alone accounts fo