The company’s newest ETF, the Dow Jones Emerging Markets Financial Titans Index Fund (NYSE Arca: EFN) will be the first ETF to provide sector-based exposure to the largest emerging markets companies in banking, insurance, real estate investing and financial services.

EFN seeks to track, before fees and expenses, the performance of the Dow Jones Emerging Markets Financial Titans 30 Index, which includes 30 of the largest emerging markets financial companies in banking, life insurance and non-life insurance and real estate.  The ETF will enable investors to grab exposure to 10 different companies investment and services and financial services.

As of Sept. 11, the top five countries represented were China (39.7%), Brazil (22.9%), India (13.2%), South Africa (9.3%), and Malaysia (4%).  What’s great is that Emerging Global Shares is no stranger to sector-based emerging market funds.  In fact, EFN will be the fourth ETF in the family of ETFs introduced by Emerging Global Advisors.

For more stories on emerging markets, visit our emerging market category.

Kevin Grewal contributed to this article.

The bad news is that the International Monetary Fund (IMF) downgraded the outlook for Malaysia’s economy at large this year. In early 2010, the economy is expected to show signs of improvement that may translate into a 2.5% expansion, explains Tom Barkley for The Wall Street Journal.

External forces are are a factor for the Malaysian economy, with risks stemming from the duration of the global recession, financial markets and commodity prices. The country still has room for an expanded fiscal stimulus, should external forces cause more pain in the economy.

Malaysia’s budget shortfall may rise to 7.7% of gross domestic product this year, from an estimated 4.6% in 2008. Any decision on boosting spending should be made in the medium term because the country faces high budget deficits and rising debt, report Shobhana Chandra and Timothy R. Homan for Bloomberg.

• iShares MSCI Malaysia Index (EWM): up 35.2% year-to-date

For more stories about Malasia, visit our Malaysia category.

Malaysia’s Bank Negara Malaysia won’t encourage a further decline in the ringgit. They are not going to lean on their currency to make exports in the Asian country more affordable or attractive, reports Natasha Brereton for The Wall Street Journal.

For now, the ringget will reflect market conditions and for the medium term it reflects economic fundamentals. Although the currency weakened against its rival in Singapore, the position is not going to change for now.

Plans for expansion include Malaysian companies branching out to emerging economies like Vietnam, Cambodia, Laos and Indonesia, as they offer plenty of opportunities. Investment in the services sector will be what emerging markets need to get their confidence back, and Malaysian companies can adapt to this, reports Bernama.

• iShares MSCI Malaysia Index (EWM): up 24.6% year-to-date

For more stories about Malaysia, visit our Malaysia category.

After being crippled in a stagnating global economy, emerging market countries in Asia are showing signs of rejuvenation, remarks Gary Gordon for ETF Expert.

Korea’s ETF iShares MSCI South Korea Index (EWY), which is up 24.2% year-to-date, is above its 200-day long-term moving average. Investors are favoring the growth potential of Korean tech companies like Samsung and LG, along with Hyundai.

Malaysia’s country ETF iShares MSCI Malaysia Index (EWM) is up 18.2% year-to-date, and it previously had a 30% off its high, or the lowest “percentage-off-its-high” of any nation. Malaysia exports petroleum, liquefied natural gas, wood and rubber. Its ETF is also weighted at 30% in financials. The only concern whether Malaysia is able to compete against other cheap manufacturers in the regions.

Taiwan’s iShares MSCI Taiwan Index (EWT), which is  up 42.5% year-to-date, is being boosted by its technology sector, and information tech makes up around 60% of the ETF. Semiconductors are making a come back and EWT is seeing the benefits.

Many Asian countries now realize that they need to boost domestic consumption or risk being fettered to the economic health of Western countries, according to the Canadian Press.

Japan has started to focus away from exports to domestic sectors including green technologies, medical services and pop culture. Prime Minister Taro Aso announced plans to increase domestic demand by $400 billion in three years and add up two million in new jobs.

• iShares MSCI Japan Index (EWJ): down 5.5% year-to-date

China’s $586 billion stimulus package is likely to boost consumer spending and increase jobs in infrastructure and public works.

• iShares FTSE/Xinhua China 25 Index (FXI): up 17.9% year-to-date

Max Chen contributed to this article.

Once thought to be immune from the economic disaster, the steady cash flows and steady demand are not as resilient as once believed. Molly Neal for The Wall Street Journal reports that many European operators are reporting falling profits, with much more of the same anticipated in the future.

Premium mobile services are no longer affordable, and have since become a luxury in markets such as Spain, France, the United Kingdom and Germany. Blame the recession for putting a damper on the growth of this sector over there.

Meanwhile, telecom companies in Malaysia and the Philippines have shown growth. TMC net.com press release also reports that coming into 2008 just over 90% of the 27 million people in Malaysia had a mobile telephone service. Evidently Malaysia and the Philippines has developed one of the more advanced telecom environments in the developing world.

Is their growth enough to restore the sector at large?

In the United States, telecommunications companies could benefit from the economic stimulus package. And despite a global recession, AT&T (T) has announced that it would spend $1 billion in expanding its global network, which would add greater capacity for businesses in the United States and overseas.

• WisdomTree International Communications (DGG): down 16.9% year-to-date

Those who follow Asian markets know that Japan is the big dog when it comes to ETF products. In fact, some believe that there is too much overlap between products offered on the Tokyo Stock Exchange.

For example, there are three ETFs that track that the Nikkei and three ETFs that track the Topix.  Japan is somewhat of a complex place.  It is very difficult to cross-list ETFs in Japan, states Paul Hoff, managing director of FTSE for the Asia-Pacific markets, in an interview with Rita Raagas De Ramos of Asian Investor.  For this reason, FTSE is introducing the first theme-based ETF in Japan.

In regard to other regions of Asia, FTSE will be introducing a new thematic ETF in Malaysia on plantations.  This will be launched on FTSE’s custom index that it launched for Malaysia.  China will be an interesting market to keep an eye on as well.  The Shanghai Stock Exchange has a nice initiative to get foreign ETFs listed on the domestic market.

Taiwan has recently opened up a whole new can of competition for ETFs opening to its doors to ETF providers, which was once exclusive to FTSE.  This enables many investors to have several ETF options and a diversified portfolio.

One problem that is systemic in Asia is the regulations that stem across borders.  In some nations, the regulations make it lax for ETFs to launch, such as Singapore and Malaysia.  In others, there are a lot of challenges, such as in Taiwan and the Philippines.

A second problem that arises in Asia is the difference in time zones in which the stock exchanges trade.  The Association of Southeast Asian Nations (ASEAN) is trying to alleviate this predicament by establishing an ASEAN board where investors from different countries can invest across each of the markets.  This will be tough to get running, though. One major problem that investors will have to overcome is the limitation of funds that can be invested outside of  his home country, which is a regulation imposed by the majority of Asian nations.

Kevin Grewal contributed to this article.

On March 31, Najib Razak, deputy of the former Malaysian Prime Minister, will be sworn in as the country’s sixth prime minister since its independence from Britain, according to the Economist. Malaysians are bracing themselves for a return to “Mahathirism,” a style of leadership that encourages state-led industrialization and promotes “Asian values.”

It is still unclear as to what the Malaysian central bank will to do with its benchmark interest rate, but some economists think it may stay unchanged at 2.5% or even drop down to 1.5%, report Stephanie Phang and Michael Munoz for Bloomberg.

Reports have shown that inflation has eased but exports fell to a record seven-year low. The Southeast Asia’s third-largest economy probably expanded around 1.4% last quarter, and the economy may contract 4% in 2009.

Malaysia’s growth performance may also mirror those of other regional tech exporters like Taiwan and Singapore. The Finance Minister is planing a second stimulus package next month on top of the previously announced $1.9 billion plan in an attempt to prevent a recession.

• iShares MSCI Malaysia Index (EWM): down 8% year-to-date
  

The impact and wrath of the global recession has taken its toll on Asian economies and exchange traded funds (ETFs) that track the emerging market.

To make it even worse, the fear that consumers have of spending may prolong this recession.

China’s Jobless Rate. With the urban jobless rate in China ballooning to its highest rate in the last 2 1/2 years, savings rates are expected to grow exponentially taking a toll on consumer demand and  paving a muddy path for economic growth. Experts believe that unemployment rates throughout Asia will increase by another full percentage point and consumer spending as a share of GDP to fall to a seven year low, states Kevin Plumberg of Asia Asset Allocation.

Contraction in Singapore. Things in Singapore aren’t looking much better. The nation’s economy has contracted in all of the last three quarters, job losses are expected to more than triple in 2009 and overseas shipments are expected to decline by 9% to 11% over the next year. This is forcing the nation to turn to extreme measures and the government to extreme spending. The government has been contemplating massive cash handouts, tax and utility rebates, states Shamim Adam of Bloomberg.

Malaysia Cuts Rates. Lastly, Malaysia’s central bank has been forced to cut its benchmark interest rate to 2.5%, the lowest its been in over a decade, states Stephanie Phang of Bloomberg.

In an attempt to rescue the Eastern part of the world, Asian governments are planning massive spending programs and hopefully this attempt will get the wheels churning and give Asian consumers a more optimistic outlook on their economy.

Two ETFs to watch for signs that the efforts these countries are making are working are:

PowerShares Dynamic Asia Pacific (PUA), 15.8% is Singapore and 24% is China

SPDR S&P Emerging Asia Pacific Report (GMF), 25.7% is China and 6.0% is Malaysia.

Further, the central bank is ready to adjust monetary policy to support growth, reports Liau Y-Sing for Thomson Reuters.

Southeast Asian economies have been strengthened by crude and palm oil prices, but a sharp turnabout in these commodities will most likely induce a slowdown in an economy that heavily relies on trade. Forecasts for domestic economic growth is said to be 1.5% in 2009 with interest rates potentially lowered to below 3% from the current 3.5% by the second half of 2009.

To boost consumer confidence and spending, the government has reduced gasoline and rice prices, according to the Associated Press. Experts in consumer research warn that the government should only control critical items such as food and petrol and let the market regulate itself.

Recently, inflation has reached 8.2% in September and 8.5% in July/August,  which was the highest level in three decades. The government has slashed its economic growth forecast to 3.5% from 5.4% for 2009 and promised a $1.9 billion cash injection into the economy next year.

Growth for the manufacturing sector is expected to drop to .8% from its original forecast of 4.3% for next year. The government plans to remove import duties for manufacturing and ease licensing requirements to help businesses.

The Deputy Minister of Finance has a more optimistic take on the current economic situation in Malaysia. He expects no recession but a slowly expanding economy with a growth rate of less than 5% for 2008 and 3.5% in 2009, writes Bernama.

Optimistic news may sway the fickle investor but the iShares MSCI Malaysia Index Fund (EWM) is currently down 43.3% year-to-date, so the optimism doesn’t seem to be warranted at the moment. The fund is 7.3% below its 50-day moving average, but sharply off the 200-day by 25.2%.

Deputy Prime Minister Datuk Seri Najib Tun Razak said the country has the kind of resilience that will allow it to grow 5% this year, according to a report on Bernama.

This comes a day after the prime minister also said the country is in no danger of slipping into a recession, and that the country has what it takes to weather the U.S. credit crisis.

Prime Minister Datuk Seri Abdullah Ahmad Badawi stated that the Malaysian reserves are strong, the surplus is strong, politics are stable, fundamentals are worthy, and their currency needs no capping.

Badawi has faith that their banking system is strong and that they have faced crises such as these before.

Razak says that despite a potential 5% growth for this year, growth for next year may need to be revisited as they take into account developments in the world economy.

Whether Malaysia rides out the storm unscathed or battered could be reflected in iShares MSCI Malaysia (EWM). In the last two weeks, Malaysia has been up 0.5% (and down 35% year-to-date), while the iShares MSCI EAFE (EFA) has been down 7.5% in two weeks (and down 37.5% year-to-date).

EWM is represented by the black line; EFA by the green.