Although the renaissance started in earnest last year, some investors may still be grappling with the fact that the PIIGS equity markets are among the world’s best performers.
In what was undoubtedly a surprise to those that were cajoled into believing the U.S. and Japan were the only developed markets worthy of investors’ capital, the iShares MSCI Ireland Capped ETF (NYSEArca: EIRL) ranked as one of 2013’s best-performing single-country ETFs. Yes, EIRL was better than the S&P 500 in 2013. [International ETFs That Topped the S&P 500]
This year, Italian stocks lead the G7 equity markets and the Global X FTSE Greece 20 ETF (NYSEArca: GREK) is one of the best country-specific emerging markets ETFs to start the year. [Greece ETF Grinds Higher]
Do not sleep on Portugal and the newly minted Global X FTSE Portugal 20 ETF (NYSEArca: PGAL). PGAL’s November 2013 debut completed the PIIGS single-country ETF puzzle. More importantly, the launch appears to have been well-timed. [Portugal ETF Debuts]
Chris Zwermann, global strategist at Zwermann Financial, told CNBC Portugal is potentially the market of year in 2014 and he is forecasting a 15% jump for Portuguese stocks after the benchmark PSI 20 gained 15.5% last year.
“It’s the market of the year because long term interest rates (are) going down because the situation is improving. On the technical (side), we see a very good chance of (the stock market) going around 15 percent higher from here,” Zwermann said, according to CNBC.
There are reasons to be optimistic about PGAL. Earlier this year, Portugal was able to successfully auction government bonds and the country is aiming to leave its massive bailout program later in the year. Portugal’ central bank is also forecasting modest GDP growth.
PGAL allocates 26.1% of its weight to utilities and a combined 30% to financial services and energy names. The potential headwind for the fund comes in the form of an almost 23% weight to consumer services stocks. Put simply, Portuguese consumers are dealing with heavy debt burdens. “The Portuguese central bank estimates non-financial private-sector debt at 284 percent of GDP in September 2013,” according to CNBC.
Still, PGAL is up 5.4% to start the new year, a performance that puts the ETF well ahead of its French, German and Swiss equivalents.
Global X FTSE Portugal 20 ETF
