• According to the Bank of Japan (BOJ), “Japan’s economy has started to pick up” and the economy is “likely to improve gradually,” writes Myra P. Saefong for MarketWatch. The BOJ left rates steady at 0.1%, which is not having much of a stimulative effect on economic activity.

• The Japanese Central Bank stated that public investment, exports and production are all on the increase, as stated in China View. Exports and production are expected to rise when other countries recover and begin to buy again. (Domestic industries are benefiting from new political party).

• The Central Bank has hopes that this is the beginning of a two-tiered economy based on high domestic demand and greater foreign exports. The Democratic Party of Japan is aiming to change the Japanese economy into one centered on domestic demand. (Japan’s new dominant political party).

Private consumption and housing investments remain weak. Furthermore, corporate profits, employment and income all remain depressed.

For more information on Japan, visit our Japan category.

• PowerShares FTSE RAFI Japan (NYSEArca: PJO): down 1.2% year-to-date

• iShares S&P/TOPIX 150 Index (NYSEArca: ITF): up 1.6% year-to-date

• iShares MSCI Japan Index (NYSEArca: EWJ): up 1.6% year-to-date

Max Chen contributed to this article.

The 10.2% unemployment figure is far worse than what economists had expected, and they don’t see any sign of relief until next year. While the pace of layoffs has slowed, the unemployment rate is continuing to climb, reports Javier C. Hernandez for The New York Times.

Unemployment isn’t just as issue here, either; millions around the world don’t expect to see relief in the form of jobs anytime soon. The European Union forecast unemployment in the eurozone to rise to 10.7% in 2010, up from 9.5% this year. Unemployment ranges from 3.5% in the Netherlands to 18.3% in Spain, reports Greg Keller for the Associated Press. In China, the official urban unemployment rate is 4.3% in the third quarter. Brazil’s unemployment was 8.1% in August, almost unchanged from the previous month.

Gold futures have soared to a record $1,100 an ounce today. While some profit-taking briefly sent gold lower, it resumed its course and analysts expect it to continue to move higher, reports Allen Sykora for The Wall Street Journal. SPDR Gold Shares (NYSEArca: GLD) is up about 0.4% year-to-date. (More on gold can be found here).

Businesses slashed inventories for a record 13th straight month in September, although sales rose for the sixth consecutive time. Many hope that improving sales figures will encourage businesses to start lifting production, although a rising jobless rate heightens fears that consumers won’t start spending anytime soon, reports Martin Crutsinger for the Associated Press. (An ETF to play holiday shopping).

The world’s largest insurer, AIG (NYSE: AIG) reported that it was profitable for the second consecutive quarter. Although things have stabilized, the company’s CEO said that earnings will remain choppy while they restructure.  SPDR KBW Insurance (NYSEArca: KIE) is up about 0.6% this morning.

G20 Finance Ministers are meeting this week to discuss financial reform and economic recovery. While these economies have put in place certain policies in order to push along a recovery, they’re not policies anyone wants to keep in place forever. The general consensus is that it’s too soon to reverse the measures, but it’s not too soon to begin talking about when and how it would happen. Government debt in developed G20 countries is likely to reach 118% of annual national income in 2014, reports Andrew Walker for the BBC.

For more stories on the global economy, visit our global ETF page.

There are three reasons in particular to watch China as its economy continues to evolve into a global powerhouse:

• In October, Chinese manufacturing rose at its fastest pace in 18 months.  China’s PMI was at 55.4, marking the seventh straight month that the index has risen, reports Chris Oliver at MarketWatch.

• Export orders climbed to 55.6 from 54.4, the fifth straight month of gains, and the most robust pace seen since June 2007.

• The government has said that gross domestic product increased by 8.9% in the third quarter and 7.9% in the second. (Five things China needs).

• A sharp rebound in new housing construction starts in September boded well for the months ahead, reports Kathrine Hille for The Financial Times.

• China’s economy has been strengthening on improved domestic demand, a nice change for the export-driven country. (More about China’s economy).

• The nation’s contribution to global economic growth in 2008 amounted to 22%, surpassing the United States to be the world’s number one contributor, states Wang Zongkai and Xie Peng of China View. That figure is expected to reach 50% this year.

For more stories on China, visit our China category.

• SPDR S&P China (NYSEArca: GXC): 55.8% year-to-date

• iShares FTSE/Xinhua China 25 Index (NYSEArca: FXI): up 47.5% year-to-date

• Claymore/AlphaShares China All-Cap ETF (NYSEArca: YAO)

Kevin Grewal contributed to this article.

Holdings: EEG holds companies domiciled in emerging markets; some of the top companies in the fund include Russian natural gas company Gazprom, Brazilian energy company Petroleo Brasileiro, Latin American wireless provider America Movil and Bank of China.

Objective: EEG seeks to track the Dow Jones Emerging Markets Titans Composite Index, which is an index composed of a representative sample of 100 emerging market companies deemed by Dow Jones to be leaders in each of 10 sectors.

Things to Know

• Brazil is the top country, with 24.9% of the weighting. China has 24.3%, Russia has 13.4% and India has 13%. Other countries include Mexico, South Africa, Chile and Indonesia.
• Oil and gas is the top sector, weighted at 30.8%; financial is 22.1%; telecommunications is 11.6%; and basic materials is 9.3%.
• The expense ratio is 0.75%.
• EEG is a relative newcomer on the ETF scene – the fund launched on July 22.

The Latest News

• Emerging Global Advisors CEO Bob Holderith feels that interest in emerging markets should continue to expand. “It’s a 25-year growth story in its sixth year.” The positive growth outlook for emerging markets goes hand-in-hand with the changing demographic picture in these countries.
• Holderith notes that in most of these countries, there’s a huge young population, all looking for the “Western experience”: cell phones, iPods, dining out and more. (More on Emerging Global Advisors).
• Although the pace may eventually slow down, Barron’s reports that emerging markets still have room left to grow in the long haul. And for the time being, they may be the place to hide out as developed markets still work toward normalcy.
• Emerging markets already account for one-third of the global GDP and 10% of the world’s market capitalization.

Many electronic makers have come to the market with aggressive cost-cutting plans and incentive to gain back consumer dollars, as the global outlook for the market shows signs of improvement.

• Although Playstation maker Sony posted fourth-quarter losses, the company’s latest results beat analysts’ forecasts by a wide margin, reports Hiroko Tabuchi for The New York Times.

• Samsung Electronic is still the ruler; the performance of other companies couldn’t match the world’s largest maker of televisions. Samsung said profits in the most recent quarter had tripled to a record $3.14 billion as it capitalized on investment in new panel technologies and marketing. It also got a boost from a weak won, which gave it the ability to undercut Sony’s prices.

• Panasonic notched its first profit in a year as sales of DVD recorders and household appliances showed some recovery. It’s now betting on batteries for hybrid and electric cars by merging with Sanyo.

Who can grab the most market share by cost cutting and appealing to consumers?

For more stories about consumer discretionary, visit our consumer discretionary category.

• PowerShares FTSE RAFI Japan (NYSEArca: PJO): down 1.1%; holds 2.8% of Sony

• SPDR S&P International Cons Disc Sector (NYSEArca:IPD): up 55% year-to-date; holds 2.2% Sony

• iShares S&P Global Technology (NYSEArca: IXN): up 38.2% year-to-date; holds 4.2% Samsung

• iShares MSCI Emerging Markets Index (NYSEArca: EEM): up 64.5% year-to-date; holds4.3% Samsung

• iShares MSCI South Korea (NYSEArca: EWY): up 63.4% year-to-date; Samsung, 19.1%

• WisdomTree International Technology Sector Fund (NYSEArca: DBT): up 18.9% year-to-date; Panasonic is 6.2%

Thailand’s Central Bank kept its benchmark interest rate unchanged, supporting Thailand’s “fragile” economic recovery, reports Suttinee Yuvejwattana for Bloomberg. The government has attempted to revive growth by increasing spending and stimulating consumption. (Hurdles Thailand has to overcome).

Finance Minister Korn Chatikavanij expects GDP to expand by as much as 4% in the last quarter of 2009 on increased government spending and improvements in exports. The ministry projected a 19% drop in exports this year, followed by a 10% rise next year. (Reasons to watch Thailand)

Moody’s kept a negative outlook for Thailand’s credit rating, stating that “political unrest could erupt again.” Protests that ousted the previous regime in 2006 have hurt consumer confidence.

Thailand’s economy is likely to contract 3.5% to 4% year-over-year in the third quarter and is expected to grow 3% to 4% year-over-year in the fourth quarter, writes Orathai Sriring for Forbes. Improvements in the third quarter from the second quarter were attributed to improvements in consumption, investment and exports.

For more information on Thailand, visit our Thailand category.

• iShares MSCI Thailand (NYSEArca: THD): up 62.8% year-to-date

Max Chen contributed to this article.

Although the pace may eventually slow down, Barron’s reports that emerging markets still have room left to grow in the long haul. And for the time being, they may be the place to hide out as developed markets still work toward normalcy. In the near-term, growth rates in developed nations are expected to be lackluster, and much less robust than those in the developing world’s. (What you’re missing when you’re not globally invested).

Countries that are resource rich and developing are stockpiling cash and shoring up their balance sheets for a strong recovery and a growth spurt unlike any seen before. Earnings and  economic activity have been revived. Morgan Stanley feels that earnings in emerging markets have bottomed in the third quarter and they’re now set to climb again. (Why frontier markets could be even bigger).

For more stores about emerging markets, visit our emerging markets category.

There are a variety of ways to play emerging markets. There are broad funds, such as iShares MSCI Emerging Markets (NYSEArca: EEM), Vanguard Emerging Markets (NYSEArca: VWO) and iShares MSCI EAFE Index (NYSEArca: EFA).

There are funds that focus on regions, such as Claymore/BNY Mellon BRIC (NYSEArca: EEB) and BLDRSAsia 50 ADR Index (Nasdaq: ADRA).

Finally, there are single-country funds, such as iShares MSCI Brazil (NYSEArca: EWZ) and Market Vectors Vietnam (NYSEArca: VNM).

Keep in mind that the narrower you get in your exposure to emerging and frontier markets, the higher your risk will be. Be sure to have an entry and exit strategy before you invest. (How to follow trends).

At the end of September, U.S.-listed ETNs held $6.9 billion in assets, compared with the $697 billion held in ETFs, writes Matt Hougan for IndexUniverse. (What are ETNs?)

There are three key advantages they enjoy:

• When ETNs first came to the market, the investment vehicle proved to be popular among investors who were looking for access to difficult-to-target markets, such as commodities and certain foreign markets. Investors flocked to funds such as the iPath MSCI India (NYSEArca: INP) and iPath Dow Jones-UBS Commodity Index ETN (NYSEArca: DJP). There are ETFs that target these areas now, but ETNs still cover certain areas not yet covered by ETFs.

• ETNs promise perfect tracking – an investor receives the full return of the benchmark, minus costs. Commodity ETFs on the other hand do show some tracking errors. Any tracking error in an ETN is borne by the issuer; tracking error in ETFs are borne by the investor.

• ETNs also have the benefit of being treated like a zero-dividend stock for tax purposes. This means that you don’t pay taxes until you sell, and holding a commodity ETN longer than a year only costs an investor 15% long-term capital gains taxes when sold. Futures-based commodity ETFs are treated like futures, which means gains are marked-to-market each year and investors pay taxes on gains at 60%/40% long-term/short-term capital gains tax rate. Be sure to consult your tax professional for advice. (Are you ready for the taxman?)

A deterrent for ETNs investing is that they are unsecured debt notes. The ETN’s value depends on the credit of an issuing bank – if the bank bankrupts, you’re out of luck. Most ETNs, however, offer daily redemptions at net asset value. Potential ETN investors should note that the CFTC’s plans for regulation in the commodities market could force some ETNs to close down, but this remains to be seen. (Differences between ETNs and ETFs)

For more information on ETNs, visit our ETNs category.

Some of the more heavily traded ETNs include:

• iPath DJ AIG Lead TR Sub-Idx ETN (NYSEArca: LD): up 128.9% year-to-date
• iPath DJ AIG Sugar TR Sub-Idx ETN (NYSEArca: SGG): up 57.7% year-to-date
• iPath Dow Jones-AIG Commodity Idx TR ETN (NYSEArca: DJP): up 16.2% year-to-date
• iPath MSCI India Index ETN (NYSEArca: INP): up 82.4% year-to-date
• iPath S&P GSCI Crude Oil Ttl Ret Idx ETN (NYSEArca: OIL): up 16.1% year-to-date

Max Chen contributed to this article.

South Korea’s growth in the third quarter was at its quickest rate in more than seven years, accompanying China and Singapore in reporting faster growth during the September quarter, reports Gillian Murdoch for Reuters. (How to capture China’s growth).

• iShares MSCI South Korea Index (NYSEArca: EWY)
• iShares FTSE/Xinhua China 25 Index (NYSEArca: FXI)
• iShares MSCI Singapore Index (NYSEArca: EWS)

Japan, Singapore, Hong Kong, Thailand and Taiwan all officially exited a recession in the second quarter.

• iShares MSCI Japan Index (NYSEArca: EWJ)
• iShares MSCI Hong Kong Index (NYSEArca: EWH)
• iShares MSCI Thailand Invest Mkt Index (NYSEArca: THD)
• iShares MSCI Taiwan Index (NYSEArca: EWT)

Japan, however, grew 0.6% in the second quarter – less than expected. (Small-cap plays for Japan).

Singapore’s economy expanded in the second quarter at its fastest rate in almost six years, as a result of a surge in biomedical production and construction. (Sectors pushing Singapore’s growth)

Hong Kong pulled out in the second quarter after its economy grew at a faster-than-expected 3.3% from the previous quarter. (Is Hong Kong facing a correction?)

Thailand’s economy grew 2.3% in the second quarter from the first quarter on a recovering manufacturing sector. (Reasons to watch Thailand)

Taiwan’s economy saw growth for the first time in a year during the second quarter. Officials expect rising demand from China to support the island’s recovery. (Why Taiwan’s heating up).

• iShares S&P Asia 50 Index (NYSEArca: AIA)
• BLDRs Asia 50 ADR Index (NasdaqGM: ADRA)

For more information on Asia, visit our Asia category.

Max Chen contributed to this article.

Van Eck has registered with the Securities and Exchange Commission (SEC) for a new India small-cap ETF, reports Cinthia Murphy for IndexUniverse. The Market Vectors India Small-Cap ETF will seek to reflect the performance of the Market Vectors India Small-Cap Index. Potential investors should note that the fund will invest in the more volatile aspects of an already volatile equities market.

There are currently three ways to gain exposure to India’s economy: WisdomTree India Earnings Fund (NYSEArca: EPI), PowerShares India (NYSEArca: PIN) and iPath MSCI India Index (NYSEArca: INP). PIN and INP have exposure to large-caps; EPI has 20% weighted in mid-caps and the rest of its exposure is in large-caps.

India’s Finance Minister Pranab Mukherjee stated that the economy is recovery, albeit a slow one, according to RTTNews. The Prime Minister is for a rational interest rate policy moving along with fiscal measures to nurture the economy.

The Reserve Bank of India has adopted a soft monetary policy, issuing banking sector funds to aid the economy.

SBI Chairman O P Bhatt expects a 7% expansion in fiscal 2010, while RBI Professional forecasters revised their forecast downward to 6%, according to Outlook India. (Why India is moving up).

On the upside:

• Companies will likely ask banks for working capital loans as the IPO market picks up, which would help revive the economy
• The auto and infrastructure industries are seeing more demand
• Industrial production is up
• Business confidence is on the optimistic side
• Stock markets are strong

On the downside:

• Private consumption demand is slowing
• The first quarter showed a decline in corporate sales
• A weak monsoon season has hurt agricultural output
• Credit growth is low
• Exports have dipped

• PowerShares India (NYSEArca: PIN): up 64.2% year-to-date

• WisdomTree India Earnings (NYSEArca: EPI): up 78.7% year-to-date

Max Chen contributed to this article.