As Belgium struggles with an identity crisis among its French and Dutch-speaking citizens, certain exchange traded funds (ETFs) may feel the repercussions of this turmoil.
Belgium is a country made up of two rather distinct regions: Dutch-speaking Flanders in the North and French-speaking Wallonia in the South. However, the capital city of Brussels is essentially an island of French-speaking Belgians in a sea of Dutch-speakers.
Despite the stalemate that exists between French and Dutch-speaking Belgians, a break up of this nation is seen as being unlikely, as reported by John Miller for the Wall Street Journal. Although this issue can be seen as some sort of a social dilemma, many of Belgium’s problems stem from the economy. Belgium has a Flemish majority of roughly six million and they have seen between $3 billion and $6 billion of tax money per year transferred south to Wallonia.
Flemish political parties also want each region to run its own health care, unemployment insurance, courts and other functions if the country was to split. However, analysts say a decision to split up is unlikely being that repercussions could include economic depression, or assassination. Along with potential economic depression comes the dispute over the capital city and who would take on the $400 billion national debt, which is guaranteed to surface if the country does indeed decide to divide.
Even with the recent acquisition of Anheuser Busch buy Belgium-based InBev, questions have appeared despite what was thought to be a more than fair buyout. Mexico’s Modelo is still analyzing the deal being that Anheuser-Busch had a non-controlling 50% stake in Modelo, reports Anthony Harrup for Dow Jones. Although Modelo executives have an overall positive outlook on their future, they do have final say in who will be its minor partner. If the AB-Modelo partnership no longer exists, perhaps the political state in Belgium may have had an influence in the decision.
Some Belgium ETFs include:
- iShares MSCI Belgium Index (EWK): down 22.8% for the past month; InBev is 7.8%
- NETS BEL 20 Index (BRU), launched on June 9; InBev is 6.7%
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.