Female Heads of State and ETF Returns: A 2012 Review
Shares of the iShares MSCI South Korea Index Fund (NYSE: EWY) and the rival First Trust South Korea AlphaDEX Fund (NYSE: FKO) traded higher for most of Wednesday, following news of Park Geun-hye's victory in South Korea's presidential election. Park, the head of the New Frontier Party, will become her country's first female president.
While the U.S. has yet to elect a female president, plenty of other countries have elected women as heads of state. In 2012, there were at least 13 women occupying presidencies or premierships across the globe, according to Time.
Some hail from nations tracked by popular ETFs, giving investors an opportunity to see how equities in those countries perform when a woman is running the show. Knowing that folks can be sensitive about such matters, it is important to note that poor performances by any country ETF cannot be blamed on the sex of that country's president or prime minister. After all, there are plenty of country ETFs that have, at times, struggled under male regimes.
Global X FTSE Argentina 20 ETF (NYSE: ARGT) The dreadful performance of the Global X FTSE Argentina 20 ETF this year, down 15.6 percent, has nothing to do with the fact that President Cristina Fernandez de Kirchner is a woman. Rather, ARGT's slack performance has everything to do with Kirchner's anti-free market principles and penchant for nationalizing industries.
That ideology has brought Argentina to the brink of its second sovereign debt default this century.
iShares MSCI Germany Index Fund (NYSE: EWG) As the top elected official in the Eurozone's largest economy, German Chancellor Angela Merkel has played an often controversial role in the region's efforts to escape one of history's worst sovereign debt crises. Merkel's heavy-handed approach to austerity measures means she probably is not the most beloved politician in Greece or Spain, but those are not the countries where she has to solicit votes.
From a pure performance standpoint, it is impossible to argue with how German equities have performed this year. The DAX is one of the world's top-performing major bourses while the iShares MSCI Germany Index Fund has surged almost 32 percent.
iShares MSCI Brazil Index Fund (NYSE: EWZ) Brazil has been the laggard of the BRIC quartet this year, meaning EWZ has been the laggard of the four major ETFs tracking the BRIC nations. In fact, EWZ is the only currently sporting a year-to-date loss. That said, EWZ has perked up in recent weeks and it could rally enough over the next few days to finish the year modestly to the upside.
Many of EWZ's woes be pinned on Petrobras (NYSE: PBR), the ETF's largest holding. Petrobras is Brazil's state-run oil producer and the government is the company's largest shareholder, meaning Brazilian President Dilma Rousseff often endures criticism for that stock's slump. In fairness to her, Petrobras was problematic before she took office.
Despite low interest rates and a variety of stimulus efforts, Brazil's economy is projected to grow at a rate below two percent this year. Economists are forecasting growth of just three percent next year.
In the U.S., a slack economy would put a sitting president in danger of not winning reelection. At the very least, it would lead to some poor approval ratings. Rousseff has defied those odds. Her approval has actually jumped slightly in the past 90 days and currently rests at an amazing 78 percent, according to Reuters.
iShares MSCI Thailand Investable Market Index Fund (NYSE: THD) South Korea's Park will not be the only woman to be an Asian nation's top elected official. Thai Prime Minister Yingluck Shinawatra is one of the others and when it comes to economic and equity performance, it appears that she is doing a fine job.
On Wednesday, the World Bank boosted its growth forecast for Thailand's 2012 GDP growth to 4.7 percent from 4.5 percent while forecasting 2013 growth of five percent. Amid contracting Eurozone economies, a prime destination for Thai exports, Thailand's economy has proven resilient and inflation is tame at three percent.
Economists and political pundits can debate how much credit Shinawatra deserves, but there is no debating the fact that the iShares MSCI Thailand Investable Market Index Fund has surged 34.4 percent this year.
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