Belgium stocks have been quietly outperforming broader European equities. With the economy picking up steam, the country-specific exchange traded fund could further strengthen.
The iShares MSCI Belgium Capped ETF (NYSEArca: EWK) was up 1.8% Tuesday. EWK has gained 2.5% year-to-date, whereas the Eeuro STOXX 50 Index is down 0.2% so far this year. Over the past year, EWK increased 25%, compared to the Euro STOXX 50 gain of 13.6%. Anheuser-Busch InBev (NYSE: BUD) is EWK’s largest holding with a weight of 22.3%.
Belgium’s economy, the sixth-largest in the Eurozone, grew at a faster-than-expected 0.5% in the fourth quarter, the strongest expansion since the first quarter of 2011, reports Andrew Clapham for Bloomberg.
The economy was bolstered by stronger business investments, which rose 0.9%, and consumer spending, which increased 0.6%, over the fourth quarter. Additionally, business confidence touched a two-and-a-half-year high in February.
“Consumer spending rose at the fastest rate in three years and the same was true for business investments,” Steven Vanneste, an economist at BNP Paribas Fortis, said in the article. “Looking forward, the robust economic performance of Belgium is likely to last in 2014 as confidence indicators continue to improve.”
In comparison, economists estimate that the Eurozone bloc grew 0.3% in the fourth quarter. Official numbers will be released Wednesday, March 4.
Standard & Poor’s raised Belgium’s credit outlook to stable from negative, keeping the country’s credit rating at AA.
“Belgium’s GDP has proven its resilience to economic and financial crisis since 2008,” S&P previously stated. “We estimate that it will grow in real terms by an average of 1.2 percent a year over 2014-2017, based on domestic demand and exports.”
The Belgium ETF was also rebounding after a 2.1% drop Monday following the Russian incursion into the Crimea peninsula over the weekend. On Tuesday, President Vladimir Putin stated that he will only use force in Ukraine as a last resort, Reuters reports.
For more information on Belgium, visit our Belgium category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, 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.