ETF Trends
ETF Trends

As developed nations around the globe begin to emerge from the global recession, France and its exchange traded fund (ETF) may have good reason to join the party after witnessing expansion in the latter half of this year.

According to Chen Li at Xinhua Net, France has boasted GDP growth of 0.3% in both the second and third quarters of 2009 and is expecting an overall contraction between 2.25% and 2.5% for the entire year.  France’s contraction rate is lower than Germany’s, Italy’s and the Eurozone’s average. (Is it time to look at France?)

Other factors in favor of the nation include:

  • France has had a more or less appropriate interest rate applied by the European Central Bank
  • Most French banks have paid with interest the money borrowed from their government
  • France’s national bank has stated that industrial activity has been increasing, fueled by increase in consumption and the automobile sector (ETFs to play Europe’s recovery)
  • From a business investment perspective, a scheduled investment-tax credit will likely boost business investment and increase the flow of credit
  • France has a stable annual population growth of around 0.5%, which is likely to keep household spending in the positive, as compared to population declines in other European nations (More on Europe’s ETFs)

Although the future for France appears to be bright, Irwin Stelzer for The Wall Street Journal warns that the nation still has plenty of problems to overcome.  These include double-digit unemployment rates, weak consumer confidence in the overall economic direction in which the country is heading, a strong euro which could impact exports and macroeconomic factors such as the failure of the government to enact reforms that would lower labor costs and reduce social charges.

For more stories on France, visit our France category.

Some ways to play France include the following:

  • iShares MSCI France Index (NYSEArca: EWQ): up 26.7% year-to-date

  • Vanguard European ETF (NYSEArca: VGK): up 30.5% year-to-date and allocates 14.5% of its assets to France

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.