Can It Possibly Be Time to Invest in Italy?

NEW YORK (TheStreet) --Investing in Italy and the iShares MSCI Capped Italy ETF (EWI)has been a money loser for many years. According to Yahoo Finance EWI is down 26% on a price basis from 10 years ago and it is still down 57% from its pre-financial crisis high although it is up 11% in 2013.

Italy has been a basket case of corrupt and peculiar politics, bailouts and poor economic data like a 12.5% unemployment rate. While the country is a long way from being fundamentally sound there are signs that things may no longer be getting worse and at some point Italian equities will recover.

The variable to a recovery of course is time but when it occurs EWI will obviously be an easy way to capture the effect. Reasons to be encouraged that a recovery could be close at hand is news this week reported by MarketWatch that the Italian economy appears to have emerged from its latest two-year recession as the second- and third quarter GDP reports were both revised to unchanged from previously negative reports.

While it is still too early to declare a fundamental victory it may be true, as mentioned above, that things are not getting worse and based on the history of normal market function where equity markets are typically a leading indicator now could be the time for Italy and EWI.

Like many smaller markets, the financial sector is the largest at 30% of the fund. Energy is second at 23%, followed by utilities and industrials which each have 15% and consumer discretionary at 10%. The fund has no exposure to tech, health care, consumer staples or materials.

If you liked this article you might like

With Eyes on Solar Eclipse, Wall Street Stumbles Yet Again

5 Solid Picks Among International Stocks