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.You can listen to the ETF Expert Radio Show "LIVE", via podcast or on your iPod. You can follow me on Twitter @ETFexpert. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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