ETFs to Track Europe’s Two Booming Economies: Spain, Ireland
Ireland and Spain are among the fastest growing economies in the Eurozone. Investors interested in gaining exposure to the strengthening markets can utilize country-specific exchange traded funds.
Ireland announced a delayed first quarter results, revealing a 1.4% month-over-month growth, with an impressive 6.5% annual growth rate, Reuters reports.
The Irish economy expanded by an upwardly revised 5.2% in 2014, its best performance since 2007, and the country’s economy is now larger than at the height of its so-called Celtic Tiger boom.
Ireland’s central bank pointed to support from domestic demand as robust retail sales and an improved labor market bolstered the economy.
“It is quite clear that Ireland will easily top the euro zone growth league table for the second-year running,” Merrion Stockbrokers’ chief economist Alan McQuaid said in the Reuters article. “Growth is now more likely to be in the 5 to 6 percent range for 2015, a positive boost for the government ahead of next year’s general election.”
In contrast the Eurozone is expected to eke out an overall annual growth of 1.0%, with Germany slightly ahead at 1.1%. [As Greece Risks Fade, Overweight Europe ETFs Back in Play]
For Italy exposure, the iShares MSCI Ireland Capped ETF (EIRL) increased 18.5% year-to-date.
Additionally, Spain’s economy expanded 1% in second quarter from the previous quarter, it’s fastest pace in eight years, and 3.1% on an annual basis, reports Maria Tadeo for Bloomberg.
Economists also believe household consumption and domestic demand are driving the Spanish economy.
“We expect the second quarter to be the strongest quarter for internal demand, and then moderate as the year progresses,” Jose Manuel Amor, partner at Analistas Financieros Internacionales, told Bloomberg. “At this point, Spain has all the elements to continue posting strong growth led by household consumption.”
The International Monetary Fund projects Spain’s economy will grow 3.1% this year.
Investors who are interested in Spain have a few more options. The iShares MSCI Spain Capped ETF (EWP) , the largest Spain-specific ETF, was up 1.6% year-to-date. Investors can also take a look at the recently launched iShares Currency Hedged MSCI Spain ETF (HEWP) , which covers the same holdings as EWP but also uses currency forwards to mitigate euro currency risks. Additionally, the SPDR MSCI Spain Quality Mix ETF (QESP) selects Spanish stocks based on value, quality and low volatility.
For more information on the international markets, visit our global ETFs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
