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How Will the CIVETS ETFs Perform the Rest of 2012?

August 6, 2012 2:12 pm
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In the first half of 2012, CIVETS countries outpaced other emerging nation groups with prominent acronyms, including BRICS and MIST.

The combination of Colombia, Indonesia, Vietnam, Turkey and South Africa has performed impressively despite myriad country-specific and global headwinds. South Africa is struggling with an alarmingly high unemployment rate. So is Egypt, the other African member of CIVETS.

A previous look at the CIVETS ETFs attempted to forecast how the funds would perform through the rest of 2012. Thus far, those predictions have been accurate, except for a negative outlook on the ETF tracking Egypt. That fund has been one of the top-performing country-specific ETFs in 2012, despite tenuous politics and rampant unemployment in the North African country.

With close to five months left in the year, investors may now reconsider what they expect from CIVETS nations for the rest of 2012.

Market Vectors Indonesia Index ETF (NYSE: IDX)
IDX was one of the more disappointing emerging markets ETFs during the earlier part of 2012, but the fund's performance has improved in recent weeks. In the past month, the largest ETF tracking Southeast Asia's largest economy has jumped four percent.

Indonesia is vulnerable to rising food prices to some extent, but GDP growth there remains solid and the government balance sheet is stable. Those factors make IDX a candidate for growth in the second half of 2012.

iShares MSCI Turkey Investable Market Index Fund (NYSE: TUR)
TUR earned the fourth spot in a February ranking of CIVETS ETF's year-to-date performances, but the fund has since jumped to the third spot due to a 9.4 percent surge over the past 90 days. Important factors pertaining to the Turkish investment thesis include the nation's tame inflation, services-driven economy, strong lira and government that is working to bolster its balance sheet.

Market Vectors Vietnam ETF (NYSE: VNM)
In terms of CIVETS ETF year-to-date performances, the Market Vectors Vietnam ETF has slipped from the gold to bronze spot since February. The ETF has incurred a double-digit loss in the past three months.

However, the the prevailing bull case for Vietnam has not incurred significant damage. In fact, this case may be getting a boost. Vietnam plans to ease rules on equity trading and accelerate initial public offerings of state-owned companies in 2012, so as to lure more investors to this fast-growing market, according to Bloomberg.

As Bloomberg notes, Vietnamese stocks are valued at $37 billion. That is less than the market value of Facebook (NASDAQ: FB).

Global X FTSE Colombia 20 ETF (NYSE: GXG)
Though Colombia's year-to-date performance has lagged performances of three other CIVETs nations, the country may still merit more consideration than Brazil and Argentina.

Some risks to GXG are readily identifiable. The ETF would be plagued by further retrenchment in oil prices, as Colombia is the third-largest oil producer in South America. Along those lines, GXG would also be adversely impacted if the government sells more shares in Ecopetrol (NYSE: EC), which is Colombia's state-run oil company and GXG's top holding.

Market Vectors Egypt Index ETF (NYSE: EGPT)
Due to the aforementioned high unemployment and political volatility, the Market Vectors Egypt Index ETF was in the cellar during the beginning of 2012. Even with early 2012 sluggishness though, the ETF has surged more than 36 percent year-to-date. The Egypt investment thesis is subject to numerous risks, but the country has at least one noteworthy supporter and plenty of economic potential.

iShares MSCI South Africa Index Fund (NYSE: EZA)
The iShares MSCI South Africa Index Fund has jumped almost 11 percent year-to-date and the its chart has gained strength in recent weeks. Still, the South Africa faces numerous risks beyond its jobless problem.

Precious metals prices have been lethargic recently. This weighs on South Africa, one of the top gold producers in the world. In addition, China is a major destination for South African exports, so if the world's second-largest economy contracts, South Africa's economy will feel the effects.

For more on CIVETS, click here.

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