ETF Outlook for the Week of May 12, 2014:
iShares FTSE/Xinhua China 25 Index ETF (NYSE: FXI)
Over the weekend Chinese President Xi Jinpig said his country needs to get accustomed to slower growth as the government continues to carry out their reforms. To combat slowing growth the country has implemented several stimulus packages, but at the same time they do not want to overheat the economy.
The comments are confusing, but it appears the President is setting the stage slower growth in the years ahead as evidenced by the recent economic numbers. The Chinese ETFs have fallen in the last month after a big rally from a 2014 low. Either sustained solid growth or more stimulus could be the catalyst to drive Chinese stock prices higher.
Market Vectors Gaming ETF (NYSE: BJK)
Two U.S.-based billionaires are making bets that Japan is the next gambling mecca. There are reports out that if the votes approve gambling that the country will become the third largest gambling region in the world behind Las Vegas and Macau with annual revenue over $40 billion.
See also: Barron's Recap: The ETF Roundtable
There are several big name casino operators that are ready to invest billions of dollars in the region as soon as the votes are in to allow gambling in Japan. BJK is a basket of gaming stocks from around the globe with the potential Japanese players in the top ten.
SPDR Barclays International Treasury Bond ETF (NYSE: BWX)
With a gain of twice that of the S&P 500, BWX has been slowing moving higher the last few years as the international bond situation continues to improve. The ETF invests in international government bonds outside the U.S. with a heavy concentration on Japan the Western Europe.
As yield in Europe plummet from astronomical highs during the financial crisis the bond prices have increased and the stability to the market is nearly back to normal. BWX and its peers offer exposure to international bonds as well as a dividend yield that is currently less than two percent. Diversification is the biggest factor to own BWX as its chart has little correlation to the U.S. stock market.
WisdomTree India Earnings ETF (NYSE: EPI)
There was a major breakout for the Indian ETFs on Friday after a month of trading in a narrow range. The 3.7 percent jump for EPI on about twice the average volume put the ETF at the highest level in over a year. The ETF is now up 13.3 percent for the year. The reason for the surge was positive remarks about an upcoming election in which the results will be released on May 16.
While investors are happy the opposition party is in the lead in the polls, they have been burned the last two elections and some analysts are taking a very cautious view towards the results. EPI will likely be on the move heading into the elections results regardless of who comes out victorious.
- Buying Into Oversold ETFs (BJK, SOCL, PBS, FB, GOOG)
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