An Update On the MIST ETFs
In the ever-expanding world of international investment acronyms, remembering these kitschy collections of letters is not an issue. Locating top-notch performance is particularly in an environment where the BRICS have struggled.
The good news is the BRICS are looking like yesterday's newspaper as other global acronyms have stepped up to deliver solid returns. One such acronym is MIST, coined by Goldman Sachs, the bank that gave the world BRIC.
The MIST quartet is represented by Mexico, Indonesia, South Korea and Turkey meaning that Indonesia and Turkey are pulling double-duty in acronyms as both are CIVETS members as well. Knowing that, it is not surprising that MIST has delivered some nice returnsin 2012.
Here is what investors can expect out of MIST going forward:
iShares MSCI Mexico Investable Market Index Fund (NYSE: EWW) EWW, the lone ETF exclusively devoted to Mexico, is looking like it might want to take a breather. However, that technical condition could be short-lived and buying EWW on dips could be a winning strategy.
A new political regime, attractive bond yields and a solid economy all bolster the fundamental case for Mexico, Latin America's second-largest economy. Long-term investors should have a look at what Nomura has to say about Mexico. Barron's reported that the research firm believes Mexico could push Brazil out of the top LatAm economy spot as soon as 2022.
Should EWW move above $64 on strong volume, that would represent a breakout and invitation to take a long position with this fund.
Market Vectors Indonesia Index ETF (NYSE: IDX) The Market Vectors Indonesia ETF has been shed its laggard status among emerging markets ETFs and has been on a tear for two months. That run could continue as the bull case for Southeast Asia's largest economy got a positive jolt earlier this week when the Central Statistics Agency said Indonesia's second-quarter GDP jumped 6.4 percent. Analysts were expecting an increase of 6.1 percent.
Further validating the bull case for Indonesia is that the GDP increase came even as global commodities demand is faltering. Fortunately, more than 60 percent of Indonesia's GDP comes from domestic demand from the country's 240 million consumers, the Wall Street Journal reported.
IDX is looking strong, but be careful with the Market Vectors Indonesia Small-Cap ETF (NYSE: IDXJ). IDXJ has slid almost five percent in the past month.
iShares MSCI South Korea Index (NYSE: EWY) Compared to the other MIST constituents, South Korea is conservative if not downright boring. Amid declining exports, South Korea's economy is showing signs of weakness. This is another case of "the Eurozone ate my lunch" as that region is a prime destination for South Korean tech exports.
To that end, the iShares MSCI South Korea Index Fund's 5.6 jump over the past month seems odd. Maybe traders are not pricing in weakness in the economy into shares of EWY, or maybe traders are unnecessarily ebullient regarding this ETF.
iShares MSCI Turkey Investable Market Index Fund (NYSE: TUR) The iShares MSCI Turkey Investable Market Index Fund is arguably the stud of the MIST ETFs. A 34 percent year-to-date gain speaks to that as does the fact that TUR is found flirting with a new 52-week high. Yes, there is a bear case with Turkey with proximity to the Eurozone being atop the list.
The the bull case is stronger, though. A strong currency, favorable demographics and a service-driven economy are all catalysts that have been mentioned before, but that does not mean those factors can be ignored. Turkey is also home to decreasing deficits and a shrinking debt/GDP ratio.
Consider TUR another valid buy-on-the-dip candidate.
For more on MIST ETFs, click here.
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