Not all countries and their exchange traded funds (ETFs) are created alike. The way various countries reacted to and recovered from the financial crisis is a testament to that fact. Two cases in point are Brazil and China, which are seemingly poised to dust the United States on a number of fronts.
An economic gap is forming as the United States inches toward a tepid recovery, remarks Martin D. Weiss for Money and Markets. The magnitude of the gap that is forming between our country and emerging markets such as China and Brazil can be seen in the unemployment numbers.
While the United States reported higher hourly earnings, increased work hours and a small decline in unemployment rates, the long-term employment rate does not look so pleasant.
- Only 59.4% of Americans are actually working
- Including part-timers looking for full-time status, plus those who gave up looking, joblessness stands at 16.3%; that’s a large difference from the government’s official 9.4% rate
- If you count the people who have stopped looking, the actual estimate is closer to 20.6%
In contrast:
- Brazil’s unemployment rate diminished to 8.1% in June. For the first time in history, their unemployment is lower than Europe’s. Brazil has increased hiring by more than 299,000 jobs in the first half of the year.
- China expects Beijing’s urban jobless rate to reach 4.4% this year. China is starting up factories, which has increased industrial production to 10.7% in June year-over-year. Urban fixed-asset investment has jumped 30.5% to $758 billion in the first four months of the year. The goal of an 8% GDP expansion is likely to be met and the country may even surpass Japan as the second-largest economy in the world by the end of the year.
These are just two ETFs benefiting, but there are several others that target China and Brazil, through both single-country exposure as well as broad BRIC funds (Brazil, Russia, India and China). Take a look at our special BRIC report for more information on BRIC countries and how you can invest in them:
- iShares FTSE/Xinhua China 25 Index (FXI): up 44.8% year-to-date
- iShares MSCI Brazil Index (EWZ): up 72.2% year-to-date
For more information on emerging markets, visit our emerging markets category.
Max Chen contributed to this article.
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.