By Richard Rittorno
With all the horror headlines from the euro zone, from riots in Greece to whether Spanish banks will actually receive €100 billion in bailout money, who is benefiting? It's an ill wind that blows no man any good, in free markets as in life. (Hint: emerging markets).
As European growth continues to fall off a cliff, market participants are turning to emerging markets, specifically the Southeast Asian region of the Philippines and Indonesia.
Both countries have been popular with emerging markets investors for some time now, with gains extending from the beginning of the crisis and a fantastically solid climb higher in 2012.
In fact the markets of the Philippines are the second best in the region, with the Thailand iShares MSCI Thailand Index Fund ETF (THD) being the best performing stock exchange in 2012.
With such growth it was only a matter of time before new products were developed to gain access to these emerging markets and take advantage of the returns. Growth is like crack to stock markets - it's highly addictive.
Two such products were created specifically for this region roughly two years ago by iShares. With the euro zone crisis blowing up once again and media pundits suggesting riots could spread in Italy, it may be a good idea to look at the Philippines and Indonesia for continued growth as large funds turn away from the euro zone.
For the Philippines
The iShares MSCI Investable Market Index Fund ETF (EPHE), according to Yahoo Finance:
Seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Philippines Investable Market Index. The fund generally invests at least 80% of assets in securities of the underlying index and in depositary receipts representing securities of the underlying index. The underlying index is a free float-adjusted market capitalization-weighted index designed to measure the performance of the Philippine equity markets.
The iShares MSCI Indonesia Investable Market Index Fund ETF (EIDO), according to Yahoo Finance:
The investment seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Indonesia Investable Market Index. The fund generally invests at least 90% of its assets in the securities of the index and in depositary receipts representing securities of the index. It uses a representative sampling indexing strategy. The index is a free float-adjusted market capitalization-weighted index designed to measure the performance of equity securities listed on stock exchanges in Indonesia. The fund is non-diversified.
Bottom line: As professional traders, mutual funds and large hedge funds seeking out growth in the Philippines and Indonesia stand to do well, especially as they seek to chase performance going into the end of the year. Be sure to use limit orders in these - they are not as liquid as other well known emerging markets ETFs.