Asia-Pacific ETFs: A Good Bet in a Down Market? | ETF Trends

Asian is home to the largest cluster of mega-global cities, with large international corporations enjoying the current economic prosperity. Though another global slowdown may threaten Asia’s markets and related exchange traded funds (ETFs), some believe that Asia will still be the first to bounce back.

1. Asia is Massive. Christina Larson, contributing editor at Foreign Policy, says that of the top 10 cities in the world, five of the biggest global cities are located in Asia, reports Steve Chiotakis for MarketPlace. In places like India and China, more and more people are being drawn to cities where innovation, change and jobs can be readily found. The Orients are beginning to see new political axes, trade networks, cultural norms, experience and technology, and sustainable living, remarks Larson. [Malaysia ETF Grows Along With GDP.]

2. Corporations Solid; Exports Aren’t. Top Asian corporations have enjoyed a nice ride after economies in the region stoked demand with copious infusions of government cash, writes Kelly Olsen for The Associated Press. However, rising interest rates, decreases in global government spending, a weak U.S. recovery and lingering debt problems in the eurozone are all casting a shadow over the sustainability of Asia’s export industry.

Bill Belchere, global chief economist for Mirae Asset Securities in Hong Kong, believes that Asia is moving toward a slower period. The major driver affecting Asia will bee “how deep and how intense is the global slowdown.” [Vietnam ETF Stumbles.]

3. There’s Still Optimism. Nevertheless, Asian companies, for the most part, look optimistic, expecting demand for high-end parts to remain solid. Rob Subbaraman, chief economist for non-Japan Asia at Nomura International in Hong Kong, comments that emerging Asia is best situated to bounce back if another global slowdown occurs, noting the region’s large foreign exchange reserves, current account surpluses, low external and public debt, healthy banks and wiggle room to cut rates. [South Korea ETFs: Down for Long?]

For more information on Asia, visit our Asia category. There are a number of ways to get exposure to the Asia-Pacific region, including through all-country ETFs and more narrowly focused single-country ETFs. To research any of these ETFs further, click on the ticker to go to the ETF Resume page. According to the ETF Analyzer, most Asia ETFs have been mixed in recent months; in the last three months, they’re up about 4%. In the last six months, they’ve looked a little more flat.

  • GlobalShares FTSE All-Cap Asia Pacific ex Japan Fund (NYSEArca: GSZ)
  • iShares FTSE EPRA/NAREIT Asia Index Fund (NYSEArca: IFAS)
  • iShares MSCI All Country Asia ex Japan Index Fund (NYSEArca: AAXJ)
  • iShares S&P Asia 50 (NYSEArca: AIA)
  • PowerShares BLDRS Asia 50 ADR Index Fund (NYSEArca: ADRA)
  • PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio (NYSEArca: PAF)
  • SPDR S&P Emerging Asia Pacific ETF (NYSEArca: GMF)
  • WisdomTree Pacific ex-Japan High-Yielding Equity (NYSEArca: DNH)

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.