An exchange traded fund that invests in Taiwan has fallen in June with the selling accelerating last week after the central bank announced a surprise interest-rate hike. Options traders are positioning for more weakness in the single-country ETF, an analyst says.
Paul Weisbruch, head of ETF/options sales and trading at Street One Financial, in a note Monday said buyers of downside puts were observed late last week in iShares MSCI Taiwan (NYSEArca: EWT).
“The activity seems to be related to a surprise interest rate hike enacted by Taiwan’s central bank last week that purportedly ‘shocked’ many market participants,” he said. Put buyers are “likely hedging a long position in the underlying ETF against downside going into the fall.” [Taiwan ETF Slips in 2011 as Inflation Heats Up]
Taiwan’s central bank last week raised its benchmark interest rate for the first time since 2008, International Business Times reported.
Index provider MSCI recently decided to keep Taiwan and South Korea in its emerging markets category. [South Korea ETF Retains ‘Emerging’ Tag]
The pullback in the Taiwan ETF has pushed the fund below its 200-day moving average.
iShares MSCI Taiwan
Editor’s note: For more information on Street One ETF research, contact pweisbruch@streetonefinancial.com.