One of the biggest risks associated with overseas or emerging markets exchange traded fund (ETF) investing has to do with political upheavals that affect the country’s economy. A good example is the recent news that will have an impact upon the iShares MSCI Ireland (IRL) and the iShares MSCI Malaysia (EWM).

Irish prime minister Bertie Ahern announced his resignation yesterday amid ongoing questioning about cash donations made to him when he was finance minister in the 1990s. Carl Delfeld for ETF Folio says Ahern will step down from his position to be succeeded by Mary McAleese on May 6th, just prior to the Irish referendum concerning the European Union reform treaty.

Ahern was a key factor in Ireland’s economic boom, so the country will be watched closely as it makes its transition to a new leader.

Year-to-date, the fund is down 1.1%.


In Malaysia, the Prime Minister Abdullah Badawi has a weakening office, as members of his cabinet have stepped down, while supporting an open contest for key leadership posts. His UMNO Party is facing hard challenges from opposing parties. Leading companies, such as Telekom Malaysia, have had to be restructured. Routes have been cut from Malaysian Airlines and extra staff have been cut.

Abdullah, like Ireland’s Ahern, has had a hand in Malaysia’s boom. Capital controls and corruption have come down, and capital structures and costs operate more transparently and efficiently.

Malaysia’s fund, after having a strong start earlier this year, is down 8.4% year-to-date.


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.