ETF Outlook For Thursday, February 27, 2014 (KWEB, BIDU, SMH, INTC, EWZ, IEIL)
ETF Outlook for Thursday, February 27, 2014
KraneShares CSI China Internet ETF (NYSE: KWEB)
The third largest holding in the ETF and one of the biggest names in the Chinese Internet space reported earnings after the bell last night. Baidu (NASDAQ: BIDU) beat estimates and more importantly it expects to beat prior guidance in the next quarter.
The stock was trading up 8 percent in after hours and is testing the old all-time high set in early January. With the ETF making up 8 percent of the portfolio the odds of BIDU moving KWEB higher is very high. It will likely also bring along its peers in trading today as well.
Market Vectors Semiconductors ETF (NYSE: SMH)
The technology ETF closed at its best level in 10 years after gaining 0.8 percent. The rally from the low earlier this month has now exceeded 8 percent.
The ETF’s largest holding, Intel (NASDAQ: INTC), was up 0.7 percent and is attempting to breakout above the 50-day moving average for the first time in a month. If INTC can break above $25.10 it will spur on more buying for the stock, the sector and help SMH continue to reach new decade highs.
iShares MSCI Brazil Index ETF (NYSE: EWZ)
The Brazil central bank increased its benchmark interest rate by 25 basis points to 10.75 percent last night. This is on top of the 325 basis points the central bank raised the rate last year. The move is an attempt to keep inflation from increasing. It is currently sitting at 5.9 percent, which is above the country’s target of 4.5 percent.
EWZ has continued to lag in 2014 after falling by 20 percent last year and the rate hike last night signifies the issues the country has with inflation. Until EWZ is able to break out of its downtrend the ETF should be avoided.
iShares Enhanced International Large Cap ETF (NYSE: IEIL)
The ETF along with the iShares Enhanced International Small Cap ETF (NYSE: IEIS) will begin trading today. They are actively managed ETFs that will invest at least 80 percent of their portfolio at all times in the market cap that they track.
The expense ratio is 0.35 percent, which is considered low for an actively managed ETF. The expense ratio for IEIS is also low at 0.49 percent. The research-based approach revolves around three factors: quality, value, and size. The top holding for IEIL is Total SA (NYSE: TOT) and the top holding for IEIS is Petroleum Geo Services. Both ETFs are the most heavily concentrated in Japan.
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