With continuous decline in the value of the yen over the past
few weeks, Japanese
that are designed to provide hedge against any fall in the
currency have continued to rally. At the same time, both
currency-hedged Equity ETFs -
WisdomTree Japan Hedged Equity Fund (
db-X MSCI Japan Currency-Hedged Equity Fund (
- have exhibited strong performances as the Japanese stock market
has continued to rally after the government announced its plans
to revive the economy through aggressive monetary
Investors looking for another way to take advantage of the
decling yen can look to trade in South Korean ETF,
iShares MSCI South Korea Capped ETF (
. The trade can be done through put option or outright shorting
of the ETF.
South Korean economy which was already facing troubles from
the Euro-zone crisis due to poor exports has been further
vulnerable due to the rising currency, which has made exports
more expensive. The situation is further aggravated by the
falling yen which is beneficial to Japanese exporters competing
against South Korean exporters.
South Korea, Asia's fourth largest economy and one of the most
stable, showed its strong resilience to the global turmoil and
turned out to be one of the best performing economies in 2012 (
South Korean ETFs: Best Way to Play Asia?
However, in the New Year, when the other economies gained
strength, South Korea seems to be lagging. Thus, the ETF tracking
the region had a poor start to 2013, returning a negative 3.74%
Are Korean ETFs In Trouble?
South Korea's housing market is also facing a difficult time
due to an aging population and retiring baby boomers, on top of
the low-growth environment.
The finance ministry of South Korea expects the economy to
demonstrate a mild recovery in 2013 and expects a very modest
growth rate of just 3% for the year. Needless to say the economy
appears to be in poor shape with certainly no help coming from a
The fund provides exposure to 106 South Korean stocks while
investing $3.3 billion in the portfolio. The volume levels are
seen at more than 1.2 million shares a day.
Samsung plays a very dominant role in the fund's performance
as the fund has assigned a healthy 21.7% of its asset base to the
company. Samsung continues to gain ground in the smartphone
business and is in neck-to-neck competition with Apple's iPhone
in terms of sales. Attributable to rising demand for Samsung
products and Apple's earnings miss, the company continues to gain
3 Apple Proof ETFs
Despite Samsung's solid performance in the near term, the ETF
does not seem to be in top form. Other top positions have been
allocated to Hyundai and Posco with respective shares of 5.3% and
3.88%. The fund charges an expense ratio of 60 basis points.
Among sector allocation, Information Technology, Consumer
Discretionary, Financials, Industrials and Materials get
double-digit allocation in the fund.
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DB-XT MS JAP HD (DBJP): ETF Research Reports
WISDMTR-J HEF (DXJ): ETF Research Reports
ISHARS-S KOREA (EWY): ETF Research Reports
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