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2013: Europe ETFs Will Disappoint, Asia Pacific Will Rally

In the past week, Chinese leadership has discussed support for “urbanization,” which almost certainly involves stimulus for infrastructure. Moreover, recent reports have said China will reaffirm its 7.5% growth outlook for 2013. Market-watchers know that this is the same percentage that was given for 2012, and that this likely signals determination to engineer the proverbial soft landing.

And there’s more. Unlike the developed world where bailouts and government expenditures are the primary reason for GDP expansion (if any), China’s economy is close to sustaining itself. Commodity prices such as steel have been on the rise and manufacturing has improved dramatically.

Selecting the Asia Pacific ETF that will work best for you may depend on risk tolerance, individual comfort and sector preferences. For example, iShares MSCI Australia (EWA) may be more comfortable for those who shy away from direct exposure to emerging markets. However, it’s fortunes are directly tied to materials demand from China. Meanwhile, if you find that you are comfortable with emerging markets — their low debt-to-GDP levels, low unemployment rates, strong GDP growth — then financially fit iShares MSCI Malaysia (EWM) may be a preferred destination.

One who is simply looking to access all of Asia with a low cost index should be intrigued by iShares All-Country Asia excl Japan (AAXJ). The current price is well above its 50-day and 200-day moving average. If you are concerned about buying AAXJ at its 52-week high, you might wait for a price pullback to the 50-day support level.

AAXJ 50 200 6 Months

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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.

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