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.

• Taiwan’s Central Bank kept interest rates at record low of 1.25% and hinted that Taiwan may be one of the last in the Asian region to raise rates, report Lee Chyen Yee and Roger Tung for Reuters.

• Officials expect consumer prices, a key indicator for policy decisions, to remain stable, with the core CPI at around zero.

• Taiwan’s main stock index has risen more than 60% so far this year, outperforming Hong Kong’s Hang Seng and South Korea’s Kospi. The index could rise even more by the first half of next year, says one analyst.

• Hsien-lin Huang, an official at the Ministry of Economic Affairs, stated that Taiwain may allow Chinese investors to purchase a stake in its flat-panel and computer-chip industries, writes Jonathan Burgos for Bloomberg. Flat-panel and semiconductor companies may also be allowed to set up plants in China and buy stakes in Chinese companies.

• Improving relations with China overall appear to be benefiting the economy. An economic cooperation framework agreement to allow cross-shareholdings of banks and insurers is estimated to create 273,000 jobs and lift exports, reports Weiyi Lim for Bloomberg.

Despite of signs of an economic recovery, rates are being kept as is in an attempt to buffer a tenuous employment situation and export outlook. Exports are being bolstered by demand from China but joblessness remains at a record 6.0%.

The markets expect the Central Bank to begin raising rates in the second or third quarter of next year. The Central Bank has already stated that it will consider raising rates if inflation, GDP and joblessness reach pre-crisis levels.

• iShares MSCI Taiwan Index (NYSEArca: EWT): up 62.3% year-to-date

For more information on Taiwan, visit our Taiwan category.

Max Chen contributed to this article.

Economists expect Typhoon Morakot to have a negative impact on third quarter GDP results because of damage to infrastructure, agriculture, tourism and several traditional industries, writes Lee Chyen Yee for Reuters. The government has vowed to spend $3 billion over the next three years for reconstruction.

A Reuters poll shows that Taiwan’s economy may suffer its largest contraction on record this year, but it could make a speedy recovery next year on post-typhoon reconstruction and increased exports to China and the United States, according to Alibaba. The poll forecasts a median 4.1% GDP contraction for 2009 and a 4.0% expansion for 2010.

The Taiwanese economy fell 7.5% year-over-year, its fourth straight quarterly annual decline, however, the drop was smaller than the first quarter’s 10.1% contraction, reports Daniel Ong Kian Hong for The Wall Street Journal. The quarterly expansion prompted the government to forecast a 4% decline for 2009, up from a previous 4.25% estimate.

Economists notice that Taiwan is exhibiting a “V-shaped” recovery similar to its neighbors. But unlike its neighbors, it is showing a weaker response among the Asian tiger economies. Further supporting a recovery, Taiwan’s big tech companies, who are traditionally the economy’s growth engines, have also been increasing capital-expenditure projections.

• iShares MSCI Taiwan Index (EWT): up 43.9% year-to-date

For more information on Taiwan, visit our Taiwan category.

Max Chen contributed to this article.

When Gary Gordon wrote about the three most impressive ETF movers in the last month, we thought we could expand on his premise and include some other areas that investors are picking up on during dips in the market place.

In Taiwan, tech companies are leading the economy. This sector in Taiwan is increasing job opportunities to grow the burgeoning firm’s global name brands such as Asustek, innovator of the “netbook,” and Acer, manufacturer of powerful yet cheap PCs that may become the world’s second largest PC maker.

• iShares MSCI Taiwan Index (EWT): up 44.7% year-to-date; up 14.4% in the last month

Turkey has some factors in its favor: the central bank has reduced rates to its lo a record low, consumer confidence is on the rise and jobless claims are declining. But the country is not completely out of the deep yet.

• iShares MSCI Turkey Invest Mkt Index (TUR): up 46.9% year-to-date; up 12.2% in the last month

Spain’s GDP will drop but not as severely compared to the first quarter, according to Reuters. The Spainish economy contracted 1.9% in the first quarter and is expected to shrink 3.6% in 2009 and 0.6% in 2010. Economic stimulus plans are likely to have increased public deficit above 10% of GDP this year.

• iShares MSCI Spain Index (EWP): up 12.3% year-to-date; up 10.5% in the last month

The semiconductor sector is on the mend with demand picking up once again, but has yet to reach numbers previously seen. Overall, the industry is still cutting back to do away with the excess fat and build up efficiency. Tech companies are lowering their forecasts.

• Semiconductor HOLDRs (SMH): up 21.8% year-to-date; up 1.7% in the last month

Homebuilders should have been elated to hear that June housing construction rose to its highest level in seven months as builders rushed to pour foundations to enable first-time homebuyers to take advantage of tax credits. Commerce Department reported that construction of new homes and apartments jumped 3.6% last month. New housing starts and permits have risen for the second straight month in June.

• iShares Dow Jones US Home Construction (ITB): up 6.8% year-to-date; up 8.7% in the last month

Max Chen contributed to this article.

Companies in Taiwan are seeking a more direct route to consumers so they can rake in the profit potential of a global brand, reports Ashlee Vance for The New York Times.

Some Taiwanese companies are already developing reputations as tech leaders of tomorrow with names like Asustek, innovator of the “netbook,” and Acer, manufacturer of powerful yet cheap PCs that may become the world’s secondlargest PC maker.

For the netbooks market, Acer and Asustek hold two-thirds of this nascent market, and sales are still high. Asustek was the fastest-growing PC company in Europe and Acer is becoming the fastest-growing PC maker overall. But these companies have not matched the marketing pizazz of larger, more established name brands. Their brands remain stronger in Asia and sales are more oriented to retailers or other intermediaries.

The computer industry in Taiwan is also diversifying in order to escape declining profit margins and they have begun by hiring thousands of software developers to build up tech services.

• iShares MSCI Taiwan Index (EWT): up 42% year-to-date; information technology is 57.2% of the fund

Max Chen contributed to this article.

It is clear that the emerging market is recovering faster than developed ones, according to ETF Grind. While developed markets are spurred by consumption, emerging markets are driven by investments. ETF Grind provides some funds that an investor may peruse so as to capitalize on the emerging markets over the next few years.

We should note, too, that there are many other ETFs that can provide similar exposure as the world decouples – this is merely a sampling:

• First Trust ISE Glb Engineering and Construction (FLM): up 12.2% year-to-date. The FLM  includes firms that specialize in designing and building infrastructure products. It also includes big-margin engineering and design firms, and focus less on materials and equipment.
• iShares MSCI BRIC Index (BKF): up 53.4% year-to-date. Emerging market funds often include countries that may not decouple as easily, such as South Korea, Mexico and Poland. But BKF provides exposure to the four BRICs emerging markets.
• PowerShares Emerging Markets Infrastructure (PXR): up 55% year-to-date. PXR it invests almost exclusively in firms that build infrastructure, and not in companies that operate and maintain infrastructure. The fund includes emerging market leaders and a few Western companies.
• Claymore/Delta Global Shipping (SEA): up 32.7% year-to-date. SEA invests in companies within the global shipping industry.
• PowerShares DB Commodity Index Tracking (DBC): up 12.7% year-to-date. DBC invests in the six most traded commodities: crude oil, heating oil, aluminum, wheat, gold, and corn.
• iShares S&P Global Materials (MXI): up 30.5% year-to-date. MXI tracks globally active firms that deal in materials. The fund is heavily weighted toward firms situated in developed markets, but they are international conglomerates with operations in emerging markets.
• Emerging Global Shares DJEM Energy Titans (EEO): This brand new fund holds 40 energy firms in emerging markets.  It is weighted toward Russian companies, which make up around one-third of the holdings.
• CurrencyShares Australian Dollar Trust (FXA): up 15% year-to-date. The Australian Dollar is a true “commodity currency” since its value is dependent the country’s natural resource exports.
• Market Vectors Agribusiness ETF (MOO): up 36.2% year-to-date. MOO invests in international agribusinesses.
• WisdomTree Dreyfus Emerging Currency (CEW): up 0.4% in the last week. CEW is new on the scene. It invests in a range of emerging market currencies that could appreciate against the U.S. dollar. It includes currencies such as the Chinese Yuan, Indian Rupee, Brazilian Real and South African Rand.

Emerging markets do have a higher risk profile than those of established foreign and U.S. markets, writes Jim Lowell for MarketWatch. But high inflows into emerging market ETFs warrants another look into this potentially lucrative area. Lowell provides the following areas of interest in the emerging markets:

Brazil. It is a viable and diversified economy that has also has good ties to the global economy.

• iShares MSCI Brazil Index (EWZ): up 64% year-to-date

South Korea and Taiwan can be traded depending on the technology sector.

• iShares MSCI South Korea (EWY): up 33.8% year-to-date
• iShares MSCI Taiwan Index (EWT): up 50.2% year-to-date

India moves along side with the global economy and China is an economic powerhouse in the global stage.

• PowerShares India (PIN): up 57.8% year-to-date
• iShares FTSE/Xinhua China 25 Index (FXI): up 35.9% year-to-date

In Emerging Europe, Russia could be played in relation to the price of oil.

• Market Vectors Russia ETF (RSX): up 97% year-to-date

Israel has strong industries in technology, biotech, and defense.

• iShares MSCI Israel Cap Invest Mkt Index (EIS): up 40.1% year-to-date

South Africa is noted for its metals and mining, or gold industry.

• iShares MSCI South Africa Index (EZA): up 27.6% year-to-date

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

For full disclosure, some of Tom Lydon’s clients own shares of MOO.

Max Chen contributed to this article.

It is unlikely that the Asian tigers will be returning to large growth rates of years past and domestic demand alone could show growth of almost 7% in emerging Asia, according to The Economist. Economists now expected that China may have GDP growth of 8%.

Growth in smaller, export-driven economies such as Hong Kong, South Korea, Singapore and Taiwan could remain more moderate. Global demand still makes up a large factor for these countries and rising unemployment will reduce consumer spending.

• iShares MSCI Hong Kong Index (EWH): up 25.5% year-to-date
• iShares MSCI South Korea Index (EWY): up 32.1% year-to-date
• iShares MSCI Singapore Index (EWS): up 27% year-to-date
• iShares MSCI Taiwan (EWT) is up 40.2% year-to-date

The IMF projects a 1.6% growth in 2010 for smaller emerging Asian countries, but other economists suggest smaller Asian economies could grow up to 4% or even 7% once China and India start going.

• iShares FTSE/Xinhua China 25 Index (FXI): up 21.6% year-to-date
• WisdomTree India Earnings (EPI): up 47.7% year-to-date

The previous downfall of Asian economies is largely blamed on the high savings and low spending rates within the countries, or it can be attributed to the cyclical economic forces that the large manufacturing sectors are now facing. But Asian economies that dropped the steepest as a result of heavy reliance on manufacturing could see a drastic recovery when the time comes.

Fiscal stimulus plans, mostly 4% of GDP, in Asia were larger than in any other region, and so far the big push appears to be paying off. And thanks to low consumer debt, government cash handouts in Asia are also more likely to be spent than saved, which will further fuel domestic demand. Asian banks are in a better position to support increased domestic spending.

Max Chen contributed to this article.

In Harvard’s top U.S.-listed holdings for the end of the first quarter, the most copious amount of U.S.-listed equity holding by a wide margin was in iShares MSCI Emerging Markets Index (EEM), writes Carl T. Delfeld for Seeking Alpha.

• iShares MSCI Emerging Markets Index (EEM): up 27.2% year-to-date

This has been a growing trend, with more investment interest in individual emerging markets. Harvard isn’t stopping with just EEM, either. The endowment is also increasing its allocation to funds focused on China, Brazil, India, Mexico and South Africa.

Why are emerging markets so attractive these days? The sentiment toward them has been lifting gradually lately, reports Nick Godt for MarketWatch. Yesterday’s performance in India only furthered the good feelings toward those markets. Some caution that the rally might be overdone, so be sure to watch the trend lines for hints.

A potential trader may look at the whole of the emerging markets through ETFs such as EEM, or one may pick out individual countries to satiate one’s investment pangs.

Current emerging markets above their trend lines include:

• SPDR S&P China (GXC): up 27.3% year-to-date

• iShares MSCI Taiwan Index (EWT): up 40.1% year-to-date

• iShares MSCI Singapore Index (EWS): up 24.3% year-to-date

• SPDR S&P Emerging Europe (GUR): up 29.9% year-to-date

• iShares MSCI Mexico Investable Mkt Idx (EWW): up 12.6% year-to-date

• Market Vectors Russia (RSX): up 59.3% year-to-date

For full disclosure, some of Tom Lydon’s clients own shares of GXC.

Max Chen contributed to this article.

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.

Assets: $1.3 billion

Holdings: EWT’s largest sector weighting is hardware, with 45.1% of assets. Other sectors include industrial materials (21.7%), financial services (14.7%) and telecommunications (10.2%).

Objective: The ETF seeks to track the MSCI Taiwan index, and consists of stocks primarily traded on the Taiwan Stock Exchange.

What’s Good

• Taiwan is the world’s 17th largest economy, the 14th largest exporter and the 16th largest importer
• Taiwan has the fourth-largest information hardware and semiconductor industry in the world and they are known for high-quality, innovative products

The Latest News

China and Taiwan have long been adversaries, but in recent months, observers have been noticing some small shifts in the countries’ attitudes toward one another. Those who have been eyeing the relationship between the two nations are especially excited about a key invitation Taiwan received.
The World Health Organization (WHO) invited Taiwan to the World Health Assembly (WHA) as an observer; that China is allowing Taiwan to attend such a major meeting is seen as a big concession toward the country. Especially after it elected Ma Ying-jeou, who is seen as more diplomatic than the previous president, Chen Shui-bian. Chen has been said to have been more interested in further antagonizing China than establishing a working relationship.

The WHA invitation caught the attention of investors because it’s seen as China finally giving Taiwan a little breathing room – something the country has wanted and needed for decades.

But the invitation was just the icing on the cake of several other positive developments in the relationship between the two:

• Tourism between the two countries has jumped, as China has added hundreds of flights between the two countries
• China has also sent pandas to the Taipei zoo in a show of diplomacy
• Recently, China and Taiwan met to put together some agreements that could lead to a flood of investment in financial services to flow across the Taiwan Strait

iShares MSCI Taiwan (EWT) is up 42.5% year-to-date