Saturday , 15 June 2024

5 Asia-Centric but Non-Chinese ETFs (+2K Views)

Since the economic recovery began, many investors have looked to Asia to drive growth and stimulate global demand. China has grabbed most of the headlines, as tremendous growth in the world’s most populous nation has essentially pulled this emerging market into a tie with Japan as the world’s second-largest economy. While China’s growth has been impressive, however, recent data releases have shown that Asia isn’t a one-trick pony. Words: 781

In further edited excerpts from the original article* Michael Johnston ( goes on to say:

Taiwan and Thailand
Taiwan and Thailand both recently reported their fastest economic growth in recent years, perhaps indicating that China’s surge has begun to ripple throughout Asia, and raising hopes for a prolonged period of broad-based growth in the region.

GDP in Taiwan rose more than 9% in the fourth quarter on a year-over-year basis and, on a seasonally-adjusted, annualized basis, growth was an impressive 18%, according to analysts at Goldman Sachs. Thailand wasn’t far behind, as the economy expanded by 5.8% from the previous year, and grew by more than 15% on an annualized basis.

Singapore reported that fourth quarter GDP contracted by 2.8% on an annualized basis in the fourth quarter but the government has boosted expectations for 2010 growth to 4.5% to 6.5%.

Even Japan, a drag on global stocks since the recovery began, has shown signs of life. Japanese GDP grew by 4.6% in the fourth quarter of 2009 and, through the first two months of 2010, Japanese stocks have been among the top performers.

ETFs For The Asia-Centric World
Asia’s advance comes at a time when the Euro zone is facing a potential meltdown and problems, ranging from potential deflation to swelling government debt, continue to mount in the U.S. Many analysts believe the stellar results at the end of 2009 have set the stage for continued growth in Asia.

Asia’s path to global economic dominance is by no means an easy one. The Chinese economy has overheated before, and some worry that surging property values indicate that another bubble has already formed. Inflation has begun to rear its head in parts of the region, while deflation has proven to be a persistent thorn in the side of Japan’s economy. In a world where the concept of decoupling seems to be dead, no economy is completely insulated from troubles in other parts of the world but the prospects for the region as a whole are undeniably bright.

As investors begin to rethink the traditional wisdom that calls for significant allocations to the U.S. and western Europe, the weighting given to Asia seems likely to increase significantly. Below, we profile five ETF options for investors looking to boost their Asia exposure.

1. iShares MSCI Thailand Investable Market Index Fund (THD):
This ETF is designed to offer exposure to Thailand’s equity markets, and offers impressive depth with about 85 holdings. THD is dominated by holdings in the financials and energy sectors, which make up almost 70% of the fund in aggregate.

2. iShares MSCI Taiwan Index Fund (EWT):
This ETF focuses on equity markets in Taiwan, a market classified as “developed” by certain sources and still “emerging” by others. Taiwan is one of the world’s rising technology centers, and the composition of EWT reflects this tilt: more than 60% of the fund is allocated to the tech sector.

3. iShares MSCI Singapore Index Fund (EWS):
Singapore is one of Asia’s financial centers, so it isn’t surprising that financials account for about half of the Singapore ETF. EWS consists of about 30 holdings and has gained nearly 90% over the last year.

4. iShares MSCI All Country Asia ex-Japan Index Fund (AAXJ):
For investors seeking diversified exposure to Asia while avoiding Japan, AAXJ is one of the best options. In addition to big weightings to Hong Kong, South Korea, and China, AAXJ gives moderate allocations to Taiwan, India, Singapore, Indonesia, Thailand, and the Philippines.

5. SPDR S&P Emerging Asia Pacific ETF (GMF):
This ETF is similar to AAXJ, but concentrates exposure on emerging markets (meaning no exposure to South Korea). GMF has more than 200 holdings and charges an expense ratio of 0.59%.

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Editor’s Note:
– The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
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