International ETF Update: China, India

Passing the Torch to China’s ETFs

As the torch is lit during the opening ceremony of the Beijing Olympics, will it light a fire under the Chinese ETFs, too?

Many investors are pondering whether they should get back into the Chinese market now and what impact, if any, the Olympics will have in both the near- and long-term.

The Games of the XXIX Olympiad are showing off the best athletes of the world, but it could also be a chance for China to flex its economic muscle for investors. Over the past 20 years, the Olympics held in Greece, Spain, and South Korea have helped to spotlight the economies of the host countries. Now it’s time for China’s strength to shine, reports John Spence for MarketWatch.

China has long been growing since before the games, at a clip of 10% a year for the past 20 years. One strategist points out that he expects the trends to continue - games or no. Innovation, technology and labor will continue to be factors in driving China’s explosive growth.

There are plenty of paths to take investors to China via ETFs:

• iShares MSCI/Xinhua China 25 index (FXI), down 21.3% year-to-date
• NETS Hang Seng China Enterprises (HKG), down 6.2% since April 16 inception
• SPDR S&P China (GXC), down 26% year-to-date
• PowerShares Golden Dragon Halter USX China (PGJ), down 29.2% year-to-date
• WisdomTree Dreyfus Chinese Yuan Fund (CYB), up 0.3% since May 22 inception

Good Numbers Raining Down on India’s Index, ETFs

A recent end to India’s dry spell could have something brewing for the coffee ETN.

Wait, what? Yes, we said India. Among the coffee-producing countries in Asia, India is the third-largest.

A drought last month threatened to lower coffee yields, but rains have rejuvenated hopes, reports Thomas Kutty Abraham for Bloomberg. Rain in the last month is said to be so good that it’s nearly wiped out the deficit. The country’s coffee exports rose 6.4% in the first seven months of the year as producers shipped more to nations such as Russia and Italy.

The stepped up production may have an impact on the iPath DJ AIG Coffee Total Return Sub-Index ETN (JO), which launched on June 24. It’s down 4% since then, but has been trading higher.

Meanwhile, the Sensex Index rose to its highest point in six weeks, led by banks, reports Pooja Thakur for Bloomberg. In particular, ICICI Bank, the country’s second-largest lender by assets, rose the most since July 23.

Sectors sensitive to interest rates, including banks, autos and real estate, are up on hopes that oil prices will continue to fall, says one analyst.

Two India-related ETFs launched this year, and they could benefit on the index’s strength:

• WisdomTree India Earnings (EPI): down 22.9% since Feb. 26 inception; 7% financials; ICICI is 3.2%
• PowerShares India (PIN): down 16.5% since March 5 inception; 10.9% financials; ICICI is 1.4%

Comments

[captainjohann:]

I will bet on HDFC bank and not on ICCI.

2008 Aug 06 08:22 AM

[kormanl:]

Take a look at HAO

2008 Aug 06 01:35 PM

[Calvin C.:]

lol

2008 Aug 06 04:33 PM

[dengood:]

You didn't mention FNI which is a blend of China and India could be a good play for a diversified approach. I am not sure how great the Olympics are going to be for China. I think whatever little it may do will be offset by a struggling U.S. economy. But then again as we have less disposable income our preference my be the "value" oriented (pardon the pun) products produced by China.

2008 Aug 06 09:21 PM

[Forone:]

Some others of us are wondering if an Olympics pop in FXI will rather be a fine buying opportunity for ultrashort FXP. Once the festivities have ended the ChiCom government, which hovers over the market like Beijing smog, will have to go back to inflation and currency problems.

2008 Aug 07 08:05 AM

[Strangewalk:]

As the consumer driven Euro and Dollar zones continue to severely weaken, havoc will visit China's export sector--a full 75% of its economy, with massive layoffs occurring even now in the prison factories sprawling over the Pearl River Delta. I'm also wondering how enthusiastically the denizens of Beijing will welcome a return to normal, after they've actually been able to breath air that's only rated 50% carcinogenic for three weeks. Of course, you can always follow Mr. Roger's lead and invest in the world's most technologically advanced counterfeiting, illegal copying and copyright infringement infrastructure--good returns there indeed.

2008 Aug 08 05:46 AM