An exchange traded fund benchmarked to Singapore’s equity market is threatening to break out after pausing for breath following a big start to 2012.

“The iShares MSCI Singapore (NYSEArca: EWS) is breaking above a three-month consolidation to score its best level in seven months,” says Investors Intelligence technical analyst Tarquin Coe. “That sideways move appears to be a bullish pennant, patterns that occur mid-way through an advance. That implies the fund is trending up to the $15 [a share]region, a level which would conquer the 2011 high of $14.61.”

The Singapore ETF is up 21% year to date. The fund holds $1.6 billion in assets and charges an expense ratio of 0.52%.

“Overbought conditions are a long way off,” Coe said. “Price action is favorably above both the 50-day exponential moving average and 200-day EMA, with both indicators rising. The ETF also benefits from a yield of 3.61%.”

The Singapore fund is recovering after a tough 2011, when it was hit by exposure to the financial sector and worries over the global economy. The Asian island country lacks natural resources but its economy grew almost 15% last year. It is one of the wealthiest nations in Asia that also boosts low unemployment, a budget surplus and high per-capita GDP.

“As a single-country fund, EWS is suitable as a satellite holding within a diversified portfolio. While Singapore is considered a developed country, its recent growth rates have been more in line with that of emerging markets,” writes Morningstar’s Patricia Oey in an analyst report on the ETF. “Not surprisingly, this fund’s volatility is in line with that of emerging-markets equities, an asset class that historically has been about 60% more volatile than U.S. equities.”

iShares MSCI Singapore

The opinions and forecasts expressed herein are solely those of John Spence, 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.