The German economy has been given new life and the exchange traded fund (ETF) iShares MSCI Germany Index (EWG) is up 12.5% year-to-date. The transformation of Germany is embedded so well that German executives are not even concerned about a slowdown in the U.S. economy. Their export-led recovery would not be dented. Although the American consumer may drive a lot of the global economy, Germany’s success is driven by Russia and the former Soviet countries – total exports within Europe are 5 times that which are shipped to the U.S., Mark Landler for The New York Times explains.
EWG has broad diversification with top holdings in Allianz, 10%; Deutsche Bank, 7%; and Daimler Chrysler, 6%. Finance and banking lead the way, followed by the auto industry and chemicals and industrial close behind. Europe could benefit from Germany’s boom because of its size and the fact that Germany is one-fifth of the economic activity in the European Union. The German economy is projected to grow about 2% this year.
For full disclosure, some of Tom Lydon’s clients own EWG.
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