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business newsETF Investing: A Compelling Case for Singapore
By
Joshua Schroeder
Jan 13, 2012 4:05 pm
With high per capita GDP, a skilled workforce, excellent business transparency, and large rapidly growing countries nearby, the future of Singapore appears to be bright.
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In my opinion, Singapore certainly has a strong case. While it is a small country with literally no natural resources and emerging markets have been volatile of late (see related index fund (EEM)), it is located in the center of rapidly growing Asia and has developed an economy with excellent companies in the areas of electronics, IT, financial services, pharmaceuticals, and chemicals. Its economy grew over 15% last year, and according to John Wasik of Reuters, the country is working to establish itself as Southeast Asia's hub for trading and technology. Further to this point, Singapore has benefited immensely from having a strategic port in one of the busiest trade areas of the world. With high per capita GDP, a skilled workforce, excellent business transparency, and large rapidly growing countries nearby, the future appears to be bright.
So, if everything is on the up and up in Singapore, why is the iShares MSCI Singapore Index Fund (EWS), the ETF that seeks to track the Singaporean equity market, down over 20% from its high in 2011? Well, even “Singapore is not immune to the eurozone debt crisis and the economy will be feeling the pressure of the latest warning from Standard and Poor’s,” claims Tom Lydon of ETF Trends. Add to that the possibility of a hard landing in China and one can see why it has sold off. However, Eugene Szeto of HSBC Holdings pointed out on Bloomberg recently that as growth in the developed world -- such as Europe and the U.S. -- slows, Singapore does have an edge as a source of funding for energy traders and commodity suppliers such as grains, sugar and edible oils. This could benefit the EWS ETF as nearly 50% of the fund is comprised of financial services companies.
As of close of trading on January 12, the MSCI Singapore Index Fund was trading at $11.40 with a NAV of $11.32 and a 12-month yield of 4.3%. Below are daily and weekly technical charts showing support and resistance levels to keep an eye on for the index fund. Have a great weekend.
Editor's note: Joshua Schroeder is an independent investor based in La Paz, Mexico. This article originally appeared on investing and economics site, See It Market.
No positions in stocks mentioned.
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