EZA allocates just 10.1% of its weight to the materials sector. However, the ETF’s upside could be limited as foreign investors are growing dissatisfied with Zumba’s lack of action to restart mining output. [Labor Strikes Could Weigh on South Africa ETF]
Additionally, South African stocks are pricier than the broader emerging markets universe. Stocks in Johannesburg trade at 15.1 times forward earnings compared to 11.2 times for a broader emerging markets index, according to S&P Capital.
South Africa is the fifth-largest country weight in the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO), the largest emerging markets ETF, at 9.7%. It is also the fifth-largest country weight in the iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG) at 7.4%. S&P Capital IQ rates both ETFs overweight.
iShares MSCI South Africa ETF
