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New Emerging Markets Acronym: CAPPT (THD, EPHE, EPU)

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March 26, 2012 3:30 pm
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New Emerging Markets Acronym: CAPPT (THD, EPHE, EPU)

Having already tried our hands at one acronym representing a group of global economies, we’re back for more. This time, we’re focusing exclusively on emerging markets as our previous acronym, DUPT, was comprised of Denmark, the U.K., Poland and Turkey.

This time around, we went searching for countries that aren’t currently represented in any of the catchy acronyms currently being used. That’s right, no BRIC, CIVETS or CASSH constituents will be found in our new emerging markets buzzword.

And that buzzword is CAPPT, pronounced “capped.” CAPPT is comprised of Chile, Argentina, Peru, the Philippines and Thailand. Fortunately, there are ETFs for each of those markets that we’ll examine here.

iShares MSCI Chile Investable Market Index Fund (NYSE: ECH)
Since Chile is the world’s largest copper producer ECH is considered by some to be a China play. That’s good when the global market is feeling rosy about China and bad when the opposite is true.

Thing is, ECH isn’t as heavy on copper as some folks think it is. Chile had an unemployment rate of just 6.6% in the November of 2011 to January of 2012 period and the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) forecast Chilean GDP growth of 4.2% this year, which would be good for ninth place in Latin America based on ECLAC’s estimates for the region.

Global X FTSE Argentina 20 ETF (NYSE: ARGT)
The Global X FTSE Argentina 20 ETF is up just over 3% this year, making it somewhat of a laggard by the standards of LatAm ETFs and it should be noted Argentina has the frontier market, not emerging market, designation.

There are concerns among investors regarding Argentina’s macroeconomic policy toward energy producers operating there, worries that are hastened by the country’s rapidly declining oil output as ETF Trends recently noted.

On the bright side, Argentina is expected to post real GDP growth of 7% for 2011 and the country is home to one of the fastest-growing Internet economies in the world, so long-term investors with an appetite for risk might want to consider small positions in ARGT.

iShares MSCI All Peru Capped Index Fund (NYSE: EPU)
Peruvian equities and by virtue, EPU, suffered a bit last year due to political concerns, but this resource-rich market has bounced back in 2012 as EPU is up more than 16% year-to-date. Earlier this month, Peru’s central bank said GDP growth will slow to 5.5% this year, but inflation will also decline to the desired 2% area.

Investors that cannot decide between ECH and EPU can get ample Chile and Peru exposure through the Global X FTSE Andean 40 ETF (NYSE: AND), which also features exposure to Colombia.

iShares MSCI Philippines Investable Market Index Fund (NYSE: EPHE)
The Philippines actually does have a home in a couple of emerging markets buzzwords, such as ASEAN and the Next 11 group.

Last week, the World Bank said the Philippine economy may grow 4.2 percent in 2012 and 5 percent in 2013, compared with 3.7 percent last year, Bloomberg reported. Poverty in the Philippines is still quite high, but that gives the government the opportunity for domestic spending in the name of eradicating poverty and that would be a boon for the economy and EPHE.

iShares MSCI Thailand Investable Market Index Fund (NYSE: THD)
In terms of the ETF’s on this list, the iShares MSCI Thailand Investable has been the equivalent of Apple (Nasdaq: AAPL) this year. No, THD does not have the same percentage performance as Apple, but it sure seems like THD goes up almost everyday and this is one of the more impressive charts you’ll find among country-specific ETFs, emerging or developed markets.

The ETF is up almost 20% since we profiled it in January. How’s that for a timestamp?

Thailand, the second-largest Southeast Asian economy after Indonesia, is forecasting GDP growth of 5%-6% this year Bloomberg reported. The country has bounced back from the 2011 floods that hampered fourth-quarter GDP, but the near-term issue will likely be the central bank’s desire to lower rates and whether or not lower rates actually come to pass.


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