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Eurozone Slows Down in Q2, Puts These Country ETFs in Focus

Sanghamitra Saha
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The Eurozone economy confirmed a slowdown in 2018 so far, having expanded 0.3% sequentially in the second quarter of 2018, falling shy of market expectations and previous quarter’s growth of 0.4% (read: Are Alarm Bells Ringing for These Europe ETFs?).

It marked the weakest growth rate since the second quarter of 2016. GDP grew 2.1% year over year in the second quarter, after 2.5% expansion in the previous quarter and missing market expectations of 2.2% increase.

In the first quarter, the Eurozone economy slowed from 0.7% growth in the preceding three-month period. Annual GDP growth slipped from 2.8% expansion in the previous period (read: What European Slowdown? Here Are 4 ETFs Beating S&P 500).

The feebly-growing economies include Italy (0.2% versus 0.3% in Q1), Spain (0.6% versus 0.7%), Austria (0.7% versus 0.8%) and Latvia (0.8% versus 1.5%), per trading economics. Meanwhile, GDP growth did not budge materially in France (at 0.2%), Belgium (at 0.3%) and Lithuania (at 0.9%). Rising protectionism and trade-related disputes possibly hurt European economies.

Though the mood is somber on a broad-based basis, political crisis in Italy and Spain make the duo more vulnerable to growth risks (read: ETFs to Gain/Lose if Italy Crisis Deepens).

Country ETFs in the Spotlight

iShares MSCI France ETF EWQ

The underlying MSCI France Index consists of stocks trading primarily on the Paris Stock Exchange. Industrials (21%), Consumer Discretionary (18.85%) and Financials (12.31%) take the top three positions of the fund and have a double-digit weight in the fund. The product charges 49 bps in fees. The fund was down 0.4% on Aug 1. It has advanced about 4% in the past month and has a Zacks ETF Rank #2 (Buy).

iShares MSCI Belgium ETF EWK

The underlying MSCI Belgium IMI 25/50 Index looks to measure broad-based equity market performance in Belgium. Consumer Staples (27.56%), Financials (24.99%), Materials (14.42%) and Health Care (10.91%) occupy the top four positions in the fund. The fund shed only 0.10% on Aug 1 and has gained 3.7% in the past month. The fund has a Zacks ETF Rank #3 (Hold).

iShares MSCI Italy Capped ETF EWI

The fund follows the MSCI Italy 25/50 Index measures the equity market performance in Italy. Financials (32.08%), Energy (18.96%), Utilities (14.62%), Consumer Discretionary (14.58%) and Industrials (12.07%) have a double-digit allocation in the fund. The fund lost about 2% on Aug 1 and has a Zacks ETF Rank #4 (Sell). The fund has added about 2% in the past month.

iShares MSCI Spain Capped ETF EWP

The underlying MSCI Spain 25/50 Index consists of stocks traded primarily on the Madrid Stock Exchange. The Underlying Index is a free float-adjusted market capitalization-weighted index with a capping methodology applied to issuer weights. Financials (41.26%), Utilities (17.42%) and Industrials (14.03%) are the top three sectors of the fund. The fund charges 49 bps in fees. The fund lost about 0.9% on Aug 1 but has gained about 3.4% in the past month. It has a Zacks ETF Rank #3 (Hold).

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ISHARS-FRANCE (EWQ): ETF Research Reports
ISHARS-ITALY (EWI): ETF Research Reports
ISHARS-SPAIN (EWP): ETF Research Reports
ISHARS-BELGIUM (EWK): ETF Research Reports
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