Pacquiao Loss Could be Hampering Philippines ETF
Shares of the iShares MSCI Philippines Investable Market Index Fund (NYSE: EPHE), one of 2012's top-performing emerging markets ETFs, are off half a percent on Monday and the catalyst behind the loss might come as a surprise to some investors.
Some might say with the ETF up almost 7.1 percent in the past month, the fund is now near-term overbought and some traders are taking profits today. Another reason could be the impact of Typhoon Bopha, which has some 1,400 Filipinos dead or missing. Or it could be a disappointing September foreign direct investment number that saw the nation's FDI slide 60 percent to $55 million from $138 million a year earlier.
All would be plausible reasons for EPHE's Monday woes, but in the case of the FDI, it should be noted that through September the Philippines has attracted almost $1.1 billion in FDI this year, up 40 percent from the same period in 2011.
Believe it or not, a big reason why the lone Philippines ETF could be trading lower today, and the emphasis should be on "could be," is Manny Pacquiao's loss to Mexico Juan Manuel Marquez in a Saturday boxing match.
Pacquiao, simply put, is the most famous athlete in Philippines history and is revered in his home country. And no, investors should not base their decisions to buy and sell any security around the outcome of a sporting event, but EPHE does have an interesting post-Pacquiao fight track record.
The Marquez loss on Saturday was Pacquiao's fifth fight since EPHE debuted in September 2010. He won the first three bouts after EPHE came to market. In two instances, the ETF was higher the Friday after Pacquiao victories than it was the Friday before the fights.
However, it should be noted that Pacquiao lost a fight to Tim Bradley in June in what many boxing fans believe was a controversial decision. Some even speculated the fight was fixed. EPHE would proceed to trade higher in the days immediately following the bout.
On the other hand, studies have been conducted regarding how some global stock exchanges perform in the wake of major international football (soccer to Americans) matches. The evidence suggests a loss for a football-crazed nation such as Italy or Spain leads to losses for the country's equities on the next trading day following the match.
In other words, it is not perfect science, but EPHE trading lower after a Pacquiao loss is not out of the realm of possibility, either. One factoid that speaks to more upside ahead for the ETF is asset growth. Heading into the Pacquiao/Bradley fight in June, EPHE had about $142 million in assets under management. Today, that number is over $205 million, according to iShares data.
As for the iShares MSCI Mexico Investable Market Index Fund (NYSE: EWW), that ETF is up almost one percent today following the Marquez victory.
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