Time To Consider Investing In Scandinavia (EWD, EFNL, NORW, EDEN, GXF)
The woes in Western Europe were greatly documented during the financial crisis a few years ago. The PIIGS were the countries at the greatest risk of imploding and affecting the entire region.
As the continent and the entire world continue to improve their economic standing, there is one region in Europe that has been a constant performer.
Scandinavia, made up of Sweden, Norway, Finland, and Denmark, did not completely sidestep the global recession, however it did rebound much quicker than the Western European nations. As the U.S. stock market hits new all-time highs, it is time to look at other countries around the world that can help diversify a portfolio. The beauty of ETFs is that the average investor has several options when if comes to investing in Scandinavia.
iShares MSCI Sweden ETF (NYSE: EWD)
The ETF has been around longer than any other that invests in the region and it has had its share of ups and downs over the years. Most recently the ETF hit a new two-year high and is on its way to test a quadruple top pattern that dates back to 2000. EWD is composed of 33 Swedish stocks with a heavy concentration on the financials and industrials.
The country’s GDP is expected to grow 1.3 percent in 2013 and increasing to 2.4 percent in 2014. From a technical perspective, the ETF has struggled to break above the $39 area. Over the last 13 years the ETF has failed to breakout and run into the $40’s. With the ETF currently trading at $35.25, it is time to watch EWD closely for a potential buy signal in the coming months.
Global X FTSE Norway 30 ETF (NYSE: NORW)
The country relies heavy on the energy industry and that is why 43 percent of the 30 stocks that make up the ETF are in the energy business. Even though the price of oil has been struggling lately, NORW has continued to move higher and is currently trading at the best level in two years.
The GDP in 2013 is expected to increase by only 0.5 percent before expanding to 2.5 percent growth in 2014. The chart shows a recent breakout above the $16.25 area and the next level to watch is the all-time high for the ETF at $18.
iShares MSCI Finland Capped ETF (NYSE: EFNL)
The economy in Finland has not been as strong as its peers with the Central Bank predicting the GDP to contract 0.8 percent this year, followed by an increase of 0.7 percent in 2014. With that said, the ETF is up 25 percent this year, outpacing both EWD and NORW.
The 43 stocks that make up the ETF are concentrated in the industrial, IT, and financial sectors. The ETF has only been around since January 2012 and the rally this year has put it at a new all-time high. Technically if the ETF can hold the breakout level of $32 in the coming weeks it will be a bullish sign for the remainder of the year.
iShares MSCI Denmark Capped ETF (NYSE: EDEN)
Slow growth is expected in 2013 with the government expecting the GDP to expand by 0.2 percent before increasing by 1.6 percent in 2014. The ETF is the best performer of the group with a gain of 35 percent in 2013 as it trades at an all-time high. The 38 stocks in the ETF are heavily concentrated in the health care and industrial sectors with one stock, Novo Nordisk (NYSE: NVO), making up an eye-catching 21 percent. Any time one stock accounts for such a high percentage it is a red flag for investors. From a technical perspective the ETF is overbought and needs to pull back to the low $40’s before it can once again be considered a buying opportunity.
Because it can be difficult for an investor to decided on which country is the best option in the Scandinavian region, Global X has the FTSE Nordic 30 ETF (NYSE: GXF). The ETF invests in all four countries with the highest percentage in the Swedish market.
The ETF is up 24 percent this year, falling in the middle of the four single-country ETFs. Based on reward versus risk, it appears GXF would be the best bet for the average investor playing at home.
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