Carl Delfeld explains that he uses country-specific ETFs as a portfolio core, complemented with global sector ETFs. Among the many benefits of global investing include:

• Country-specific ETFs make it easy to access foreign economies, especially those that have limits on foreign investment
• Global ETFs give true and diverse exposure to the local economy, making them indispensable to every portfolio
• Gains by U.S. investors in overseas markets have enjoyed a “dollar kicker” when assets are repatriated to U.S. dollars
• Country-focused ETFs are a good way to aim a portfolio at weighting countries more on growth potential rather than market capitalization; this way, any growth potential is harnessed and none of those gains are left out
• Single country funds also make plays upon other areas; for example, Australia can give good exposure to commodities, and is in the position to spot most of China’s growth; Singapore’s ETF also has high exposure to industrials and telecommunications
• By using the single-country ETFs, it is possible to challenge the larger conventional indexes, and still garner the diversification and gains.

Delfeld cites Australia and Singapore as good examples of single country funds that have weathered the recession quite well. Singapore is a high-quality market at the center of Asia’s growth. GDP grew 14.9% annualized in the third quarter. Australia is benefiting from an upbeat mood among its denizens.

For more stories about global ETFs, visit our global ETF category.

• iShares MSCI Australia Index (NYSEArca: EWA): up 74.7% year-to-date

• iShares MSCI Singapore Index (NYSEArca: EWS): up 57.3% year-to-date

Australia’s Central Bank Governor Glenn Stevens says that government stimulus spending will be eased and interest rates raised as the economy expands, reports Jacob Greber for Bloomberg.

Australia’s government has revealed an improvement of up to $12.3 billion in the past year’s budget and the improved outlook has contributed to a fall in long-term interest rates, according to AsiaOne News.

Despite the strides made, there are still pitfalls ahead.

The government projects budget deficits until 2016. Treasurer Wayne Swan stated that the shortfall will equal 4.9% of GDP in the year ending June 30 and net debt will peak at 13.8% of GDP in fiscal 2014.

Jobless rates were at 5.8% last month, with 664,000 unemployed, and Swan expects it to peak at 8.5% by June 2011. The Central Bank estimates unemployment rates to peak at “six-point something.”

The government job loss projections may be 230,000 too high because of better-than-expected economic performance, reports John Rolfe for The Daily Telegraph. This has signaled the Central Bank to begin raising interest rates from a 50-year low.

• iShares MSCI Australia Index (NYSEArca: EWA): up 60.8% year-to-date

For more information on Australia, visit our Australia category.

Max Chen contributed to this article.

• Australian business confidence increased 8 points to 18, its highest level in almost six years, reports Jacob Greber for Bloomberg. The rise in the sentiment index could prompt Glenn Stevens, Reserve Bank Governor, to raise interest rates from its current “emergency level.”
• The country’s GDP grew more than expected in the second quarter, by 0.6%, outperforming most other developed markets. Many now believe that Australia’s central bank will be among the first to raise rates as a result of this growth.
• Expenditures on machinery and equipment rose by 0.5% in the second quarter.
• Household spending also rose by 0.5% in the second quarter.

On the downside, however, Australia’s unemployment rate remained a seasonally adjusted 5.8% in August from July, but the economy lost 27,100 jobs, higher than the expected 15,000, writes James Glynn for The Wall Street Journal.

The Reserve Bank of Australia won’t necessarily wait for a peak in unemployment before raising interest rates. There are already murmurs of raising rates to 3.25% from 3.00%, while others still believe it will take better job employment numbers to goad the Central Bank into raising rates.

If the Central Bank raises borrowing costs and unemployment continues to climb, the economy’s expansion could begin to slow.

Retail sales and housing finance both fell, increasing concern over the waning impact of the government’s stimulus plans. However, the government still backs its $19 billion in stimulus spending as a way to support jobs during a weaker economy, writes Jacob Greber for Bloomberg.

• iShares MSCI Australia Index (NYSEArca: EWA): up 53.7% year-to-date

For more information on Australia, visit our Australia category.

Max Chen contributed to this article.

The Immigration Department of Australia issued a report that revealed a 60% increase in the number of migrants who entered Australia in 2008-09 in the employer-sponsored category, report Nicola Berkovic and Paul Maley for The Australian. Construction companies were recruiting overseas so as to obtain highly skilled workers such as engineers and project managers.

John Stutton, Construction Forestry Mining and Energy Union national secretary, seems disconcerted by Australian companies that are looking for overseas workers when 35,000 Australians have lost their jobs in the construction sector over the last 12 months. Immigration Minister Chris Evans defends the influx of migrating workers because those workers bring in skills Australia needs.

The impact of this in the long-term is up in the air, but one factor that could weigh on the economy: money paid to migrant workers doesn’t necessarily go back into Australia’s economy.

The Australian economy is doing better than expected and the Central Bank has concluded that it does not need to tamper with benchmark interest rate of 3%, writes Rod McGuirk for Forbes.

One piece of poor economic news came with official data: Australia’s trade deficit has increased to $11.24 billion during the three months through June. The lower world price for Australian iron ore will likely reduce economic growth for the three months by 0.2%. Treasurer Wayne Swan noted a 15.8% fall in export prices during the June quarter.

• iShares MSCI Australia Index (EWA): up 41.7% year-to-date

For more information on Australia, visit our Australia category.

Max Chen contributed to this article.

There is a growing conflict between resource-rich countries and mining companies over production, and in some places, countries are seeking to rewrite contracts or even reclaim property, reports Robert Guy Mathews for The Wall Street Journal. For example, Rio Tinto (RTP) was chastised by the Guinean government for not moving along its $6 billion project fast enough and the country stripped and gave away the rights to develop 50% of the mine to another company.

During the bottoming of the commodity market, companies become less interested in investing in risky projects and countries begin to impose additional taxes and covenants on existing mining ventures to make up for lost revenues. This scenario would shift mining interest away from lucrative but politically risky countries and would consequently reduce money flow into poor countries.

Mining companies mostly fear the possibility of losing billions in investments if governments decide to nationalize the companies’ assets or change contract stipulations.

BHP Billiton (BHP), the world’s largest miner, is cutting back on aluminum production in Africa, turning away from Russia and increasing copper, uranium and gold production in South Australia. It joined Rio Tinto in a iron-ore project, valued at $10 billion, in Australia.

Stifled by government setbacks in Africa, Xstrata PLC is shifting its strategy to acquisitions. It has proposed a merger with Anglo American PLC (AAUK). Vale SA (VALE), world’s second-largest miner, is also considering an acquisition of Anglo as a more conservative growth possibility.

• iShares MSCI Australia Index (EWA): up 24.7% year-to-date; RTP is 2%; BHP is 15.3%

• iShares MSCI Brazil Index (EWZ): up 55.6% year-to-date; VALE is 7.1%

For more information on mining, visit our metals & mining category.

Max Chen contributed to this article.

Here are some reasons why things in Australia are looking up:

• The IMF has upgraded their economic outlook for Australia this year: it now predicts a small contraction, followed by a big rebound in 2010.
• Rachel Pannett and Enda Curran for The Wall Street Journal report that the upbeat views coincide with latest forecasts from the Organization for Economic Cooperation and Development (OECD), which also predicts a mild downturn this year. The revisions are in response to steps the government took to mitigate the downturn.
• Business sentiment was also positive for June for the first time since December 2007, and borrowing costs will stay historically low and unchanged. The sentiment index rose 6 points to 4, after holding below zero for the previous 17 months.
• The growing business sentiment is indication that the economy may dodge the global recession. And there is nothing dodgy about that.

• iShares MSCI Australia Index (EWA): up 23.8% year-to-date

For more stories about Australia, visit our Australia category.

The idea of communist China buying up sections of the continent of Australia and then taking the minerals from the Earth, only to sell them to the Communist People’s Republic of China has the Aussie nation somewhat annoyed. Some 21.3 million people have reacted with aggrieved nationalism, in response to the possible Chinalco merger, where the Chinese would buy stakes in the mining industry totaling $22 billion in Australia, explains Michael Wines for The New York Times.

Rio Tinto may actually be scrapping the deal after all, since an agreeable solution couldn’t be reached, report Amy Or, Jeffrey Sparshott and Dana Cimilluca for The Wall Street Journal.

But it’s far from an end to China’s growing relationship with Australia.

China is Australia’s biggest trading partner, one of its biggest tourism customers, the largest single buyer of its government debt and a major buyer of farmland and real estate. Australia seems to be reevaluating its relationship with a country they don’t know very well.

Meanwhile, the bigness of China is spreading wider, as General Motors (GM) is trying to finalize a deal to sell the Hummer division to a Chinese buyer. Analysts say the brand’s future lies in either slimmed-down SUVs or large special-purpose vehicles not unlike the military-troop carriers that formed Hummer’s roots, says Austin Ramsy for Time Magazine.

The sale of the Hummer to the Chinese is estimated to be valued at $500 million, although a price tag has not been disclosed. The sale would also save 3,000 American jobs for the time being.

• iShares MSCI Australia Index (EWA): up 26.4% year-to-date

The deal would make Chinalco Rio Tinto’s dominant shareholder and guarantee it two board seats. There are tow major reasons the presure is mounting for the deal to occur:

1. A concern that a British-based company has forged an arrangement with a Chinese state giant that does not adequately protect the value of strategic Australian resources, especially iron ore. Core assets would be reorganized.
2. The premium provided by the Chinalco bid above the then-share price has been swallowed and left behind by the rising value of Rio Tinto stocks. The Chinese-driven demand for the commodities has taken the share prices higher because of a resurgence in overall demand.

If and when the deal goes through, the world will be dominated by four huge global mining giants, with a contraction of the once-broken global mining industry.

• iShares MSCI Australia Index (EWA): up 9.2% year-to-date; Rio Tinto is 2.6%

Why should investors consider single country funds? These country funds allow for some commodity exposure and provide a little more diversity over picking a single commodity fund. Potential investors should note that some funds are heavily weighted in commodities and their economies could be too dependent on them – Russia energy dependence is a prime example. It is worth the extra few minutes to peruse the finer details of specific country funds.

While there are many different commodity-rich countries to choose from, these are just some examples of countries that are rich in commodities.

South Africa. This country’s miners are the largest producers of platinum, gold and chromium. South Africa is an emerging market with a large middle-class. They have natural resources; developed financial, legal, communications, energy and transport sectors. But there is a high level of joblessness and poor infrastructure does constrain growth. The government tries to control inflation, have budget surpluses and create jobs through government-owned enterprises.

• iShares MSCI South Africa Index (EZA): up 3.9% year-to-date; materials is 29.7%

Chile. Its economy favors foreign trade and it has healthy financial institutions. Commodities make up around 75% of total exports and exports are 40% of GDP. Copper is a main staple of the country, which accounts for 33% of government revenue. The government adheres to a counter-cyclical fiscal policy by holding wealth from trade surpluses during economic growth, and goes into deficit spending when there growth is low or copper prices are down.

• iShares MSCI Chile Investable Mkt Idx (ECH): up 18.9% year-to-date; materials is 19.5%

Russia. Since 2000, Russia has improved its financial sector and they had high trade surpluses. But the positive trends started to reverse itself in the second half of 2008. Their banks are now faced with liquidity problems. The economy is heavily reliant on energy and raw materials. Investors are wary of the country’s corruption, institutions and exchange rates.

• Market Vectors Russia ETF (RSX): up 30.1% year-to-date; gas & oil is 40.2%

Australia. This is the world’s largest net exporter of coal. Australia has a high per capita GDP. The government focuses on reforms, low inflation, housing market and ties with trading partners like China. In recent years, their exporters of raw materials and agricultural products enjoyed the high prices of commodities. The government may also provide a fiscal stimulus to deter slow growth in 2009.

• iShares MSCI Australia Index (EWA): down 0.1% year-to-date; materials is 25.6%
  

Max Chen contributed to this article.

Although markets began last week in positive territory, the mining stocks Rio Tinto and BHP Biliton both took markets lower upon recent news. Local shareholders voiced their concerns over the controversial Chinalco deal at the meeting, just as investors did at last week’s London AGM, reports Terry Mc Cran for Courier Mail.

The speculation that the two major mining companies had been taken over concerning the Chinalco deals has many believing that downside risk is going to outweigh short-term gain. For investors, a commodities investment in an ETF holding one or both of these companies can be worth its weight, as the diversification alone can benefit a portfolio.

A single-country ETF can be a way to access the commodity sector of countries rich in natural resources, such as Chile, Australia and Russia. In Australia, for example, much agricultural production is in the hands of cooperatives or privately held as farms, so an investment in the country fund can give the commodities exposure craved, reports The Australian. Australia is well-endowed with minerals and fossil fuels (excepting oil). It also holds the world’s largest known economic resources of iron ore, lead, zinc, silver and more, reports Digital Reflections.

Today, concerns about swine flu are spilling over to global markets, and Australia is no exception, reports Candice Zachariahs for Bloomberg. Australia’s dollar dropped for the first time in three days on concern that the flu would deepen their recession.

• iShares MSCI Australia Index (EWA): up 4.1% year-to-date; BHP 16.2% of assets; Rio Tinto 2.4%.

• iShares S&P GSCI Commodity Indexed Trust (GSG): down 12.2% year-to-date