As much of the rest of Europe struggles to sort itself out, Germany’s exchange traded fund (ETF) has emerged as one of the continent’s bright spots.
Germany contributes massively to the eurozone’s GDP. In fact, two-fifths of it comes from the high-saving, export-intensive countries of Germany and its neighbors, in addition to Finland.
The Economist points out that other eurozone neighbors such as Ireland, Italy, Spain, Portugal and Greece are sagging under the weight of weak public finances, poor export competitiveness and big trade deficits. France, which accounts for the remaining fifth of output, straddles the line between weakness and strength. [Germany ETF: Can The Momentum Continue?]
But could Germany’s strength just be a case of all things being relative?
Some have pointed out that Germany’s economy fell faster and harder in the financial crisis, hence the bounce back is more intense. Germany has 37 companies in Fortune’s list of the top 500 global companies ranked by total revenue, so this alone can vouch for the country’s ability to rely on export-driven growth.
Hans Werner-Sinn for The Wall Street Journal reports that Germany could struggle with its weaknesses as a location for business and industry, in particular its tight regulation of the labor market and its welfare policies. The well-being of the country’s economy also relies on a denial of the EU rescue package, which was agreed upon in May and currently is meant to expire in a little more than two years’ time. If the package is extended, it will be tougher for the country to right trade imbalances. [Europe ETFs: Who’s Hot, Who’s Not.]
- iShares MSCI Germany Index Fund (NYSEArca: EWG): Up 12.5% in the last three months
- SPDR DJ Euro STOXX 50 (NYSEArca: FEZ): Germany is 28.1%
- iShares S&P Europe 350 (NYSEArca: IEV): Germany is 11.4%
Tisha Guerrero 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.