The upward momentum of the Australian exchange traded fund (ETF) appears to have recently run low on steam, but there is still room for growth. iShares MSCI Australia (EWA) is up 21% year-to-date and with global economic growth still expanding, there are plenty of reasons why EWA and the Aussie economy should continue to flourish. Gary Gordon for Seeking Alpha reports the overall global expansion needs exporters/suppliers of materials and/or industrial products, and around 30% of EWA’s companies are involved in the processing of materials and/or industrial products.
Gordon goes on to point out some warning signs, such as the fact financial companies make up 40% of the ETF. It is also noted volume has doubled in the last year, meaning many investors have seen the potential in EWA, but it could mean a problem investors want to get out of EWA as fast as they got in. Do your homework and make sure the ETF fits in your portfolio strategy and don’t forget the stop-losses.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.