The EWS fund holds almost half of its weighting in financials, followed by a quarter of holdings in industrials.
South Korea
- iShares MSCI South Korea Index Fund (NYSEArca: EWY)
- First Trust South Korea AlphaDEX ETF (NYSEArca: FKO)
- IndexIQ South Korea Small Cap ETF (NYSEArca: SKOR)
South Korea’s economy, Asia’s fourth-largest, is teetering on the edge of being a developed world economy. The country is heavily dependent on its export industry, which accounts for around 60% of its GDP. Additionally, the country also holds strong trade ties with China, which may become a major factor in determining growth for South Korea.
Currently, the prospects of a slowing global economy have diminished South Korea’s growth projections. Additionally, rising inflation has also dampened the outlook for any potential accommodative measures to help spur the economy. Earlier this year, following the disruptions from the Japan earthquake, economic expansions in most large Asian exporting countries were hurt.
The South Korea funds favor the country’s cyclical industries, including the consumer discretionary, information technology, industrials, financials and materials sectors.
Taiwan
Taiwan, though considered an emerging market, shows characteristics of a developed economy. Economic growth has been showing moderate improvements, far from the break-neck speeds at which other emerging markets have been experiencing.
The small island heavily relies on its export industry, which accounts for about 70% of total GDP, and more than half of that goes to China. As Taiwan and China open their borders to one another, trade between the two will steadily rise, making Taiwan more of an indirect play on growth in China.
The technology sector is Taiwan’s largest industry. Taiwan is a large supplier of computer goods, including LCD panels, computer memory, networking equipment and other electronics.
Consequently, EWT holds a large weighting in the information technology sector. Financials and materials also make up large allocations within the funds. The small-cap Taiwan ETF heavily favors industrials, technology and materials sectors.