After several years of glum performances, iShares MSCI Spain Capped ETF (NYSEArca: EWP), the largest exchange traded fund tracking stocks in the Eurozone’s fourth-largest economy, is up nearly 23%. That makes EWP one of the best-performing single-country developed markets ETFs and speaks to a strengthening Spanish economy.
European economies are expected to enjoy earnings growth in the year ahead from cyclical sectors that benefit from improved global growth and a weakening euro currency. Europe will likely benefit from increased trade as the U.S. led bout of reflation helps bolster stronger growth outlooks globally.
“Long Europe/underweight U.S. trade has really been the gift that keeps on giving. But when you look at the fundamentals, there is reason for this. We have seen country after country dodging the populist bullet — from the Dutch, to the French, now the Italians, and will go straight through to the Germans at the beginning of fall. Those will continue; I think there is a reason that this momentum will continue,” Gina Sanchez, Chantico Global CEO, said in an interview with CNBC.
Ebbing political volatility in Spain and some major improvements to local economic data are helping drive stocks there higher. Additionally, the bank-heavy EWP could benefit as Spain’s banks are viewed more favorably by global investors.