Solid economic fundamentals are only one piece of the puzzle. ENZL is also a probable beneficiary of the "yen carry trade." Currency traders worldwide sell yen to buy higher-yielding currencies like the New Zealand dollar and/or the Australian dollar. ENZL should benefit from this practice. ENZL also offers an enviable 4% annualized yield that is desirable in a rate environment that should be more stable in 2014. Keep in mind, since the May-June tapering swoon that crushed bonds and yield-oriented investments last year, ENZL has stayed above its 52-week lows.
2. iShares MSCI Netherlands (EWN). It is true that Standard & Poor's recently downgraded Dutch debt. And losing one's triple AAA rating should be a big deal, at least theoretically. On the other hand, Fitch and Moody's reaffirmed the heralded triple AAA ratings, and the Dutch bond market has not skipped a beat. Even better, a rising number of folks believe that the Netherlands may have turned the proverbial corner by placing recessionary forces in the rear-view mirror.
Economic concerns notwithstanding, EWN largely focuses on non-cyclical stalwarts like Unilever and Heineken with a 27% weighting to the consumer staples sector. Furthermore, EWN remains in a strong price uptrend with limited volatility over the previous 18 months.
3. SPDR S&P China (GXC). This particular basket of Chinese equities could qualify as a must-own from both a technical and fundamental basis. The Chinese economy grows at a clip that is the envy of the industrialized world and it does so without an unconventional quantitative easing (QE) package. Corporations in GXC are trading at a collective P/E below 10. In fact, the current price of GXC is below the highs reached in April of 2011, nearly three years ago. Have these companies grown their earnings since April 2011? You bet! What's more, GXC is above its long-term 200-day moving average. You may need to be patient with China, but its a country worthy of an allocation.
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