A Surprising ETF With Oil Problems

France is not a major oil producer. Even among European countries, France (and nearly every other country on the continent) trails Norway by a wide margin in terms of total crude output.

With that in mind, it might surprise some investors to learn that the iShares MSCI France ETF (NYSEArca: EWQ) has tumbled almost 11% over the past three months as the United States Brent Oil Fund (NYSEArca: BNO) has plunged 37%.

In reality, EWQ’s oil-related woes are not too surprising. The lone France ETF allocates 9% of its weight to Total (NYSE: TOT), shares of which are down 19% over the past 90 days. By market value, Total is Europe’s second-largest oil company and one of the largest French companies from any industry.

With a dividend yield of 5% and a trailing P/E of just over 10, Total looks tempting relative to Exxon Mobil (NYSE: XOM), which is slightly more expensive than its French rival while yielding just 3.1%. However, Total is not the beginning and the end of EWQ’s oil-related issues. [Don’t Kiss the France ETF]

French banks have significant exposure to Russia. As a percentage of total book value, Societe Generale had 26% exposure to Russia as of early August. h

But wait. There’s more.

“Secondly, as if the French banks did not have enough troubles already given their leading exposure to Russia, they take three spots of the top 10 banks that have the most energy exposure as % of shareholder equity,” said Rareview Macro founder Neil Azous in a research note out Wednesday.