Henry L. Becker, Jr.'s  Instablog

As kids we were all told that money does not grow on trees.  As of late one of the strongest sectors of the global economy has been trees.  OK not trees but the timber industry is in full stride.  There are a number of factors that could be driving the performance.

Planting roots

The big endowments in the U.S.have long held investments in timber for its low correlation to other major asset classes.  The fact that more investors are aware of the diversification that adding timber to a portfolio brings could be driving demand.  More likely though is the global demand is rising. As the emerging markets of the world are modernizing the demand for wood and paper products has risen and will continue to rise.  As well, the land on which the timber grows is worth something and in demand.

ETFs to grow on

iShares S&P Global Timber & Forestry Industry Index (ticker WOOD) is one play on timber.  WOOD is comprised of 25 companies that own, management or supply stream of forests and timberland.  WOOD is up over 29% in the last month and is well above both its 50 and 200 day EMA.

Claymore Beacon Global Timber Index (ticker CUT) is another play on timber.  CUT is comprised of 30 companies from around the world that own or lease forest land and harvest timber.  CUT is up over 24% in the last month and is also well above its 50 and 200 day EMA.


Disclosure Statement: ETFGPS is a blog that Navigates The World of ETFs. Sustainable Investment Strategies LLC is a Registered Investment Adviser in the State of Maryland, and does not hold positions in the ETF(s) listed above at the time of writing. Investors who are interested in money management services may visit the Sustainable Investment Strategies LLC web site.

The Miracle on the Han River, also known as South Korea, is an impressive story.  South Korea is the 15th largest economy in the world and home to the second largest metropolitan area in the world, Seoul.  Additionally, South Korea is a world leader in ship building, automobile manufacturing and steel manufacturing.  Where South Korea really shines is in the world of high technology.  Ever heard of Samsung?  According to the Economist Intelligence unit, in 2007, South Korea ranked third in the world in IT competitiveness.

Stepping on the  gas peddle

According to Seyoon Kim of Bloomberg.com, The Bank of Korea raised forecasts for GDP this year and next.  The cause of the increase is interest-rate cuts, government stimulus and demand for exports.  South Korea is one of the top 15 largest exporters in the world.  Bloomberg’s Kim also notes that Hyundai Mobis Co., recently made a deal worth $70 million to supply fog lamps to Chrysler.  Earlier in July, Bloomberg’s Kim wrote about the intention of Korea to raise interest rates in November.  This would make them the first Asian Central bank to begin policy easing.

Getting in on the action

Not surprisingly, the iShares South Korea ETF (ticker EWY) has been one of the strongest single country ETFs thus far YTD.  The fund is up over 28% YTD and is above both its 50 and 200 day EMA.  Additionally, a strong lagging indicator is pointing upward and that is the 50 day EMA has crossed above the 200 day EMA recently.  Not surprisingly, EWY is heavy in technology with approximately 27% of the portfolio in IT of which the lion’s share is in Samsung.  With 99 total holdings, even though heavy on tech the fund has significant exposure to industrials, financials, and materials.

Chart courtesy of StockCharts.com

Disclosure Statement: ETFGPS is a blog that Navigates The World of ETFs. Sustainable Investment Strategies LLC is a Registered Investment Adviser in the State of Maryland, and may hold positions in the ETF(s) listed above. Investors who are interested in money management services may visit the Sustainable Investment Strategies LLC web site.

Many of the metal commodities have been enjoying a nice rebound thanks to renewed faith that China will continue to snap up vast amounts of natural resources.  According to the Economist.com, another factor lately has been the merger deal making. In late June Xstrata and Anglo American proposed a merger.  If completed this would produce the third-largest mining company in the world.  This news comes only week after Australian mining giants Rio Tinto and BHP Bilton agreed to combine their iron-ore operations in Australia.

Meaning of Mergers

Mergers usually mean lower costs for the merged operations which is great for shareholders.  Additionally, the combined resources, and exploration opportunities of the two companies could position the merged firms nicely for the next commodities run.  As the world emerges from the recent financial funk countries like India and China are sure to increase their appetite or metals.  That is not to say the U.S. and its infrastructure spending which will help demand for metals.

Your ETF Plays

The iShares Global Materials Sector ETF (ticker MXI).  More than half of this fund is in mining (specifically the stocks mentioned in this post).  The fund is up 17.80% YTD.  The fund is also above its 50 day EMA and and just above the 200 day EMA.

The SPDR S&P Metals and Mining ETF (ticker XME).  While this is a domestic fund it still has plenty of potential with a commodity run.  The fund is up 30.62% YTD.  Additionally, the fund is above its 50 day moving average and making dancing near its 200 day EMA.

Charts Courtesy of StockCharts.com

Disclosure Statement: ETFGPS is a blog that Navigates The World of ETFs. Sustainable Investment Strategies LLC is a Registered Investment Adviser in the State of Maryland, and may hold positions in the ETF(s) listed above. Investors who are interested in money management services may visit the Sustainable Investment Strategies LLC web site.