Amid the recent Eurozone tensions, a single country ETF that has seen trading activity that is off the chart is iShares MSCI Spain (NYSEArca: EWP). Unique in its class as being the only listed ETF to grant country specific equity exposure to Spain and averaging about 327,000 shares traded per day, the ETF has registered six 1 million share plus days in the past two weeks, and trading activity remains high daily lately.
On yesterday’s nearly 3% decline, EWP finished at a new multi-year low which probably does not surprise many given the renewed recent negativity and tensions surrounding the European situation.
EWP is rather concentrated in a handful of equity names, with the top weighting Banco Santander making up 19.58% of the portfolio, and followed by Telefonica SA (18.49%), Banco Bilbao Vizcaya Argentaria SA (10.56%) to round out the top three.
From a sector standpoint, the fund is heavily tilted toward Financials, at 41.37% of the portfolio, and followed by Communication Services (18.49%), Industrials (11.76%), and Utilities (9.82%), with smaller weightings in several other sectors.
Despite the recent wash-out, at least some institutional players are positioning for potential upside in the country specific fund in the summer months as we saw July 27 strike calls trade yesterday in notable size for the name.
To put this in perspective, the 27 strikes were “in the money” just a little over a month ago, but are now out of the money options after the recent drubbing that Spain has taken.
It remains to be seen if the European situation resolves itself going into the summer, or if we will have repeat of the summer of 2011 where tensions accelerated throughout August and spilled into the fall, finally capitulating in October and dragging equities significantly lower before a recovery took place.
iShares MSCI Spain