Asia Is Still Hot and These ETFs Are Smokin' Chuck LeBeau Oct 28, 2009 11:40 am |
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Asia has drawn attention because of its large growth rates and its ability to emerge out of the global recession with a V-shaped recovery.
Take Hong Kong and China as examples: Hong Kong's economy grew at a seasonally adjusted 3.3% in the second quarter of the year; and China is expected to grow at a rate of 8% for the year.
These nations have been able to pull themselves up by their boot straps, mainly because of fiscal stimulus plans, which accounted for nearly 4% of GDP, and were higher than any other region of the world.
Government stimulus packages have been successful in Asian nations because of low consumer debt and a high propensity to save. This way of life has lead these nations to further develop and enable incomes to rise, which will likely cause the domestic demand for goods and services to increase as well. In fact, demand from domestic consumption is expected to add nearly 7% to the growth rate of the smaller emerging nations of Asia.
To add to the attractiveness, most nations have kept unemployment rates relatively tame, many big technology companies in the region are increasing capital-expenditure projections, and the International Monetary Fund has openly stated that it expects the region as a whole to continue to grow.
Lastly, Asian nations are diligently working together to construct an agreement that will free up trade. Over time, this will help the region by lowering economic barriers, further enabling nations to develop more efficient economies of scale.Additionally, the agreement could potentially increase the inflow of foreign direct investment, which could further lead to technological advancements and even more economic growth.
Some good ways to access the Asian markets are through the following ETFs:
- The SPDR S&P China (GXC), which has more than doubled from a March low of $36.21 to close at $72.85 on Friday.
- The WisdomTree India Earnings (EPI), which is up 138% from a March low of $8.95 to close at $21.30 on Friday.
- The iShares MSCI Emerging Markets Index (EEM), which allocates nearly 47% of its assets to Asia. The ETF is up 104% from a March low of $19.94 to close at $ 40.76 on Friday.
When investing in international equities, it's important to keep in mind the inherent risks involved. To help mitigate these risks, the use of an exit strategy is important.
According to the latest data from SmartStops.net, an upward trend in the previously mentioned equities could potentially come to an end at the following price points: GXC at $69.07; EPI at $20.92; EEM at $39.19. These price points fluctuate and change on a daily basis and updated data can be found at SmartStops.net.
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