This has been an excellent year for some Middle East bourses, particularly those in Kuwait, Qatar and the United Arab Emirates.
Investing in those markets is still a new concept to many investors in the U.S. and when they do opt to play the Middle East, they do so with a diversified fund such as the iShares MSCI Frontier 100 ETF (FM) .
FM has surged 21.1% this year while popular diversified emerging markets ETFs have lost ground, indicating the ETF’s combined 52% weight to Kuwait, Qatar and UAE is working to its benefit. However, FM is just months away from significant changes as MSCI upgraded Qatar and UAE to emerging markets status earlier this year, meaning the two countries will leave FM in May 2014 for funds benchmarked to the MSCI Emerging Markets Index. [Frontier Markets Losing Some Shine]
That also means Qatar and UAE will represent just a sliver of that index’s weight. Investors looking to stay involved with those countries have other ETF options, including the Market Vectors Gulf States Index ETF (MES).
MES tracks the performance of the largest and most liquid companies in the Gulf Cooperation Council (GCC) region and allocates 78% of its weight to UAE, Qatar and Kuwait in that order. Additionally, MES tracks a GDP-weighted index so the ETF will not be affected by the emerging markets promotion landed by Qatar and UAE. [Get in Early With Frontier ETFs]
Most importantly, noted technical analyst Ralph Acampora pointed out on Twitter Monday that MES has staged a significant technical breakout and the ETF is now trading at levels not seen in over five years.
MES Is up 2.6% Monday on volume of 7,700 shares, which does not sound like much, but consider the ETF’s trailing 90-day average is about 6,660 shares.
The ETF trades around $26.80 at this writing, but Acampora sees upside to $32.
Market Vectors Gulf States Index ETF
ETF Trends editorial team contributed to this post.
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.
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