Brazil’s policymakers’ fiscal and monetary actions enabled the country to regain its footing in the first half of this year. Leading indicators suggest that the there could be a speedy return to Brazil’s recent growth rates, reports Latin Business Chronicle. (Why this is just the start of the trend).

As the real has picked up its value, other countries and economies are not faring as well. Spain’s economy has lagged most of the other Euro nations, despite the return of investors. That’s despite Banco Santander raising $8 billion – more than three-quarters of which came from international investors – in early October when its local unit made its stock market debut. It was the world’s largest IPO this year. Read more on Spain here.

Brazil’s exports have been strong, thanks to demand from China for soy and iron ore. The improvement is also in part because of improved trade links with Asia and Africa. (Why ties like this are important for future growth.)

With the continued export diversification and active trade policy, along with a large and growing domestic market, the unique structure of Brazil’s economy could keep the country on top. (What else is shifting in Brazil to support economic growth.)

For more stories about Brazil, visit our Brazil category.

• iShares MSCI Brazil Index (NYSEArca: EWZ): up 118.4% year-to-date

• iShares MSCI Spain Index (NYSEArca: EWP): up 39.7% year-to-date

• SPDR S&P China (NYSEArca: GXC): up 64% year-to-date

President Barack Obama and Dominique Strauss-Kahn, managing director of the International Monetary Fund, both told Chinese officials that letting the yuan appreciate would help the global economy. Chinese President Hu Jintao and other Chinese officials and economists,  however, continue to defend the country’s current currency policy, reports Andrew Batson for The Wall Street Journal. (Why strong yuan may be a good thing)

With exports for the year down about 20% and many manufacturers closed, China is loath to let the yuan appreciate because it would make exports more expensive overseas. Currently, the Chinese economy is recovering at the expense of European and Asian competitors since the U.S. dollar, along with the pegged yuan, is falling. Most private analysts don’t see any changes to China’s policy with the yuan anytime soon.

Strauss-Kahn has stated that China needs to “look more forward to investment and to long-term stability.” A stronger currency would help a Chinese household’s purchasing power, which would support economic growth from within the country.

Not everyone agrees. World Bank Chief Economist and former Chinese government adviser Justin Yifu Lin argues that a stronger yuan could hamper China’s export sector and possibly China’s entire economy, which would have a negative affect on global growth.

According to WisdomTree, there are several factors that favor an appreciating yuan relative to the dollar in years to come:

• Long-term economic growth potential.
• Emerging role as an economic leader in the world arena.
• Diversification away from the dollar by arranging trade agreements using the yuan with other countries.
• A gradual transition from an economic model focused on exports to one focused on domestic consumption.
• Rising yuan valuation as China develops even further. Emerging market currencies are often valued at a discount to long-term purchasing power because of risks associated with emerging markets.

For more information on the Chinese currency, visit our Chines yuan category.

• WisdomTree Dreyfus Chinese Yuan Fund ETF (NYSEArca: CYB): up 1.8% year-to-date; expense ratio is 0.45%

Max Chen contributed to this article.

The U.S. trade deficit grew to a more-than-expected $36.5 billion in September, and 60.5% of the deficit was to China alone, writes Justin Fox for TIME. The U.S.-China economic relationship won’t be resolved anytime soon because of U.S.-based corporations selling products that were partly or entirely made in China. The more important fact, however, is that there is no way to ignore a rising political and military power like China. (Reasons to watch China).

The trade model between China and the United States remains unchanged, with China keeping the yuan artificially low and focusing on its export industries while the United States incurs a higher trade deficit and more debt, remarks Mark Trumbull for The Christian Science Monitor. (Is a strong Chinese yuan a good thing?)

Obama has not shown any pushback against China’s seemingly non-free market policies, despite promises on a tougher stance on China. However, economists are doubtful that any pushback would occur, citing several reasons:

• The tougher approach could result in higher-priced goods for U.S. consumers and the protectionism would rapidly spread to other nations, putting up trade barriers.
• China’s manufacturing power is not slowing one bit.
• An adjusted yuan won’t necessarily help U.S. manufacturers.
• The United States doesn’t have much leverage on China since China is the country’s main lender.

U.S. trade representative Ron Kirk stated that the United States wants trade and investment barriers removed to promote an open global trade system and Obama wants the United States to pursue “pragmatic cooperation” with Beijing, according to BBC News. Obama also urged Asian countries to break away from their dependence on exports and pursue “balanced,” sustainable growth.

For more information on China, visit our China category.

• iShares FTSE/Xinhua China 25 Index (NYSEArca: FXI): up 58.2% year-to-date

• SPDR S&P China (NYSEArca: GXC): up 66.8% year-to-date

• PowerShares Golden Dragon Halter USX China (NYSEArca: PGJ): up 65.9% year-to-date

• Claymore/AlphaShares China Small Cap (NYSEArca: HAO): up 96.5% year-to-date

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

Max Chen contributed to this article.

Norman Chan, monetary authority chief executive in Hong Kong, has suggested that low interest rates and quantitative easing of U.S. monetary policy has allowed people to borrow at low cost and reinvest into Hong Kong’s economy, which is consequently fueling an asset bubble, reports Alex Frangos for The Wall Street Journal. With Hong Kong’s economy in the early stages of recovery, some observers are warning of dangerous bubbles seen forming in property and stock prices. (Hong Kong gearing up for a correction?)

Hong Kong’s currency is pegged to the U.S. dollar and the monetary authority basically has no control over interest rates. Still, if they are able to adjust target interest rates, raising rates will attract more money from foreign investors hunting for higher yields, which would also drive up asset prices.

Other happenings in Hong Kong include:

• Residential property prices in Hong Kong are increasing as buyer interest from mainland China rises, but completion of housing construction remains low. Gonvernment stimulus and low interest rates have provided the necessary money for funding, according to NuWire Investor. Hong Kong’s overall residential price index rose 8.3%, or 8.4% in real terms, in the second quarter of 2009.

• According to the International Monetary Fund (IMF), Hong Kong’s economy is projected to contract 2% in 2009 and expand 5% in 2010. The fall in exports and imports is slowing, as well as the fall in private consumption.

• The unemployment rate in Hong Kong dropped from the previous months to 5.2% for the three months ending in October as construction, food services, insurance and wholesale sectors hired more people, according to China View. (Hong Kong faces its pressures)
  

For more information on Hong Kong, visit our Hong Kong category.

• iShares MSCI Hong Kong Index (NYSEArca: EWH): up 58.4% year-to-date

Max Chen contributed to this article.

The Chinese government may let the Chinese yuan appreciate against other currencies, which means better exports and better growth for everyone – except China, reports Jeff Cox for CNBC. (Reasons to watch China).

European and U.S. manufacturers would stand to gain the most since their products would be cheaper in China. Revenue would also get that extra kick when exchanged back to domestic currencies. The U.S. trade deficit with China would also diminish, giving the U.S. economy another boost.

Of course, there are drawbacks to a stronger yuan. Higher prices on Chinese goods could push up inflation in the United States and force the Fed to raise interest rates faster than desired. Investors also see that the Chinese monetary policy is a linchpin in the prevention of a trip back to global recession.

Investors can take advantage of the yuan with the WisdomTree Dreyfus Chinese Yuan Fund ETF (NYSEArca: CYB). CYB tries to reflect money market moves in China and changes in the yuan against the dollar. China may soon need to begin a tighter monetary policy to control inflation. Any Fed moves to raise U.S. interest rates will likely be mirrored by China’s boost to the yuan. (How to play China’s currency)

For more information on global currencies, visit our currency category. Or, take a look at our ETF Trends’ guide to currency ETFs.

• WisdomTree Dreyfus Chinese Yuan Fund ETF (NYSEArca: CYB): up 1.8% year-to-date

Max Chen contributed to this article.

Some factors in favor of timber’s outlook include:

• Leading indicators in the U.S. housing market are stabilizing and the recovery is being priced into the European and U.S. timber sector, reports David Campbell for Citywire. (Timber: A  comeback story?)

• The U.N. Economic Commission for Europe projected a surge in Chinese-led demand for timber next year. Production capacity has also tanked since many plants have closed during the recession. With capacity diminished, timber prices may continue to rise as demand increases and supply remains low.

• Chinese President Hu Jintao expressed China’s interest in Malaysia’s palm oil and timber sectors as the two parties  signed trade agreements, according to AFP.

• Malaysian Prime Minister Najib Razak said that China “has an insatiable demand for natural resources to fuel its economic expansion.”

• U.S. homebuilders received a lift yesterday as Toll Brothers (NYSE: TOL) reported that demand for new homes is increasing. The luxury builder said that contracts for new homes rose 42% in the fiscal fourth quarter, according to the Associated Press.

Najib also noted that President Hu remarked about China’s intention to increase the amount of trade with respect to palm oil and Malaysian timber. (Accessing the global recovery with timber ETFs).

For more information on the timber industry, visit our timber category.

• Claymore/Beacon Global Timber Index (NYSEArca: CUT): up 46.5% year-to-date

• iShares S&P Global Timber & Forestry Idx (NasdaqGM: WOOD): up 27.7% year-to-date

Max Chen contributed to this article.

Emerging Global Shares has filed to launch a group of ETFs aimed squarely at the BRIC economies, according to Cinthia Murphy for Index Universe:

Emerging Global Shares INDXX India Infrastructure Index Fund

• Emerging Global Shares INDXX India Infrastructure Index Fund
• Emerging Global Shares INDXX China Infrastructure Index Fund
• Emerging Global Shares INDXX Brazil Infrastructure Index Fund
• Emerging Global Shares INDXX India Mid Cap Index Fund
• Emerging Global Shares INDXX China Mid Cap Index Fund
• Emerging Global Shares INDXX Brazil Mid Cap Index Fund
• Emerging Global Shares INDXX Growing Asia Large Cap Index Fund

Every single company within these funds will have no more than a 10% weighting. Net operating expenses are pegged at 0.85% for each fund. ALPS Advisors is the advisor for each fund, with Emerging Global Advisors LLC the subadvisor. (Read about the widening wealth shift between the United States and emerging markets).

Each fund will invest in securities, ADRs and GDRs of various companies to replicate their respective indexes. A fully replicating strategy will be used to assemble the funds, however, representative sampling may be used, if needed. (The ultimate guide to the BRIC ETFs). You can read the prospectus for the funds here.

The BRIC economies have been standouts this year as the world recovers from the global financial crisis, gaining about 110% since the market’s low. Russia has been one of the strongest, gaining 137% year-to-date. Brazil has gained 117%, China is up about 60% and India has added about 90%.

For more stories about BRIC ETFs, visit our BRIC category.

China’s buying spree has been seen as a major driver of commodity prices in recent months. But did they get a little too carried away? David Taggart for iStockAnalyst reports that this was more bargain shopping than an actual demand-driven rally. As a result, demand for copper has not yet picked up, leaving China done with buying and considering selling. (Can the recent commodity hot streak continue?)

Analysts say that any big upward moves in copper prices aren’t expected. Large stockpiles of copper sit in warehouses and as much as 350,000 tons could be re-exported. According to Bloomberg, there are not many buyers for refined copper and the price of copper has more than doubled this year already. Finding a buyer might be tough. (Will a global recovery help spur demand for copper?)

Is copper’s run on hold for now? Some feel it may be. If it cools have, have your exit strategy at the ready to put a cap on your losses. Read about trend following in The ETF Trend Following Playbook.

For more stories about copper, visit our copper category.

• iPath Dow Jones AIG Copper TR Sub-Index ETN (NYSEArca: JJC): up 110.1% year-to-date

Many politicians and intellectuals feel that the balance of power is shifting from the United States to China and some believe that the co-operation of the near-equals could solve world’s woes, according to The Economist. (Reasons to watch China).

China is the world’s biggest holder of American debt, which gives the country a unique hold on the American economy and reserve-currency status. Nevertheless, China will continue to lend to America and talks about the Chinese yuan becoming a world reserve currency may be just that.

With the Occident in a less-than-satisfactory state, Chinese companies may push to lift the trade barriers on high-technologies imposed by the West and start to court America’s high-tech industries. Perhaps, China may soon have a more permanent presence in the United States in areas such as the car industry.

Some Chinese leaders have voiced caution over the stability of China’s recovery. Yu Yongding, former adviser to China’s Central Bank, argues that wasteful spending on unnecessary infrastructure projects could drain the country’s fiscal strength, which would leave China with “no more drivers for growth.” (Things China needs to grow).

China is still grappling with many issues that need attention inside the country including rising protests, corruption, surging crime and leaders who fear their own citizens. If you’re invested in China, be sure to have a strategy for both entry and exit. It’s a country with tremendous growth potential, but it’s not without its issues, either.

For more information on China, visit our China category.

• iShares FTSE/Xinhua China 25 Index (NYSEArca: FXI): up 57.3% year-to-date

• SPDR S&P China (NYSEArca: GXC): up 66.2% year-to-date

• PowerShares Golden Dragon Halter USX China (NYSEArca: PGJ): up 62.5% year-to-date

• Claymore/AlphaShares China Small Cap (NYSEArca: HAO): up 93.3% year-to-date

• Claymore/AlphaShares China All-Cap ETF (NYSEArca: YAO): up 7.1% in the last week; YAO launched on Oct. 19 (read about it here)

Max Chen contributed to this article.

The U.S. dollar has hit a 15-month low against a basket of major currencies today on positive economic news from Asia. The feeling that the Fed won’t raise rates anytime soon and the fact that central banks will continue to provide liquidity could continue to pressure the dollar, reports Bradley Davis for The Wall Street Journal. PowerShares DB U.S. Dollar Index Bearish (NYSEArca: UDN) is down slightly this morning.

Treasury Secretary Timothy Geithner said today that he’s encouraged by the efforts Japan and China have made to increase internal demand instead of relying on Americans. It’s a shift, he said, that could contribute to more stable growth. iShares FTSE/Xinhua China (NYSEArca: FXI) is up about 0.25% this morning.

Homebuilder exchange traded funds (ETFs) are trading as high as 4.5% this morning on news that Toll Brothers (NYSE: TOL) new contracts are up 42%. The luxury homebuilder also expects fourth-quarter revenue to top expectations. SPDR S&P Homebuilders (NYSEArca: XHB) is up 3.2% this morning. For more stories about real estate, click here.

UPS (NYSE: UPS), the world’s largest package delivery service, said this morning that it expects volume to grow next year amid economic recovery. The company also said it may raise shipping rates next year, and the size will be announced in December, reports Harry Suhartono for Reuters. iShares Dow Jones Transportation Average (NYSEArca: IYT) is up about 1.5% today; UPS is 8.2%. For more stories on the transportation sector, click here.