Exchange traded funds (ETFs) had their ups and downs in March. Who were the real standouts, and which area dominated?
Global markets captured four of the top five positions for the month of March. Does this mean a turnaround is in the works? The only way to answer that question is to watch the trend lines to see what develops. Many markets are not out of the woods yet, and there are still fragile areas of the world.
The top ETF was the iShares MSCI South Korea (EWY), which gained 30.6%. After some renewed confidence in the financial sectors, South Korea plans to issue bonds overseas in an attempt to raise dollars and boost its own economy. The government is going to sell dollar-denominated foreign exchange stabilization bonds, worth an estimated $1 billion, in hopes of bringing in dollars and to increase the won’s value.
The second-place ETF was the Claymore/MAC Global Solar Energy (TAN), which gained 29.2%. The Chinese government “intends to take a firm attitude to support the local development of solar energy in China.” China didn’t offer specific details or a timeline. Banks are quickly lending money to China’s domestic solar companies, though, sparking concern that this could lead to dependency.
The third-best ETF was iShares MSCI South Africa (EZA), which gained 21.4%. The unemployment rate in South Africa declined and the Labor Force Survey reports a drop to 21.9% in the fourth quarter from 23.2% in the third quarter of 2008. In an effort to prop up struggling businesses, the South African government will help companies caught in “cyclical difficulties,” but the assistance will only be provided if companies are unable to get funds through banks.
The fourth-best ETF is Market Vectors Russia (RSX), which gained 21.3%. The Russian Economy Ministry expects lower GDP figures for the second and third quarters but there may be growth in the fourth quarter. Inflation has abated some in March. For 2009, the GDP is likely to fall 2.2%, investments may diminish 13.8%, but trade could grow 0.3%.
The fifth-best performing ETF is iShares MSCI Austria (EWO), which gained 20.8% for the month. In the fourth quarter of 2008, Austria’s GDP dropped 0.2% as a result of a 0.8% quarterly decrease in exports to Germany and emerging Europe. Forecasts have Austria’s economy contracting 0.5% for 2009, whereas it saw a 1.8% growth last year. Austria has lent heavily into central eastern Europe (CEE) countries with foreign lending amounting to $278 billion, or 65% of its GDP.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.