A Country ETF With 2017 Rebound Potential

Count the iShares MSCI New Zealand Capped ETF (NYSEArca: ENZL) among the single-country international exchange traded funds that has recently been struggling.

Through the first eight months of this year, the lone New Zealand set a torrid pace, but the ETF has since struggled in a big way.

After shedding 4.7% last week, ENZL resides nearly 19% below its 52-week high seen in early September. Much of ENZL’s strength this year can be tied to an interesting scenario: New Zealand’s currency, the New Zealand dollar prior kiwi, is rising while the Reserve Bank of New Zealand (RBNZ) is lowering interest rates.

SEE MORE: New Zealand ETF Gets Central Bank Assist

However, RBNZ has signaled it probably will not lower rates again and that might explain recent weakness in ENZL. How a weak New Zealand dollar plays is important because the country is an export-driven economy.

“The external sector is important to New Zealand as it is an exporter of commodities such as milk and sheep and other foodstuffs. Tourism is also important to New Zealand,” according to a Seeking Alpha analysis of ENZL.