Spain, as one of the largest of the so-called PIIGS members, has
been an in-focus economy for quite some time. This is especially
true given the country's extreme level of unemployment, and
troubles in terms of enacting measures to get the budget situation
This poor combination led to huge losses for the Spanish equity
market, and it left many feeling pretty pessimistic on the
country's future. However, some recent trading and solid data may
signal an end to the malaise for the in focus nation (see
all the European Equity ETFs here
First, investors have seen a broad turn regarding the outlook for
European markets in general. The continent managed to rebound in
the tail end of 2013, and some now believe that the debt situation
in many of the more troubled members is now under control.
And for Spain in particular, the country's service sector appears
to be rebounding strongly, at least if you look at the most recent
service PMI report out of the nation. In this report,
activity rose to 54.2
from 51.7, marking the sharpest rise since before the Great
Not only is this figure robust, but also represents some level of
when compared to other large economies
in Europe as well. For example, both Italy and France saw
sluggishness in their reports, suggesting that Spain is starting to
outperform, and is actually looking pretty positive from this front
3 European ETFs Leading the Recovery
Thanks to this report, the main way for U.S. investors to target
Spanish investments, the
iShares MSCI Spain Capped ETF (
, rose by about 1.7% on the day. Volume was also elevated, and the
Spain ETF was doing far better than broad Europe ETFs such as
which were up about 0.35% on the day.
This move higher also continues the Spain ETF's resurgence as of
late, as the fund is now up roughly 33% in the past six month time
period. And, thanks to this recent bout of strength, the fund is
actually in positive territory for the trailing five year time
frame too, suggesting that Spain might finally be on relatively
solid footing once more.
Given this solid trading and the more robust data coming out of the
nation, some investors might want to consider a Spain ETF play in
2014. For these intrepid investors, we have highlighted some of the
key details regarding the Spain ETF below:
Spain ETF in Focus
EWP tracks the MSCI Spain 25/50 Index, following a basket of about
two dozen Spanish stocks. Since there are so few companies in the
fund, concentration risks are a bit of an issue, especially
considering financials take up over 45% of the portfolio (see
the Top Ranked ETFs here
Beyond that huge allocation though, the fund does a decent job
spreading assets around. Utilities, telecoms, and industrials all
receive at least 10% of the fund, and three more sectors get at
least 5% of assets.
In terms of top individual holdings, Banco Santander, BBVA, and
Telefonica take the top three spots. And, all three of these
receive at least 12% of assets, so there is definitely some
concentration in these names.
Volume is pretty solid for this fund, as are assets under
management, so bid ask spreads look to be minimal in this product.
In fact, more than half a million shares move hands daily, and
close to $900 million is invested in EWP.
The Spanish stock market definitely has some momentum, as evidenced
by its recent performance and some decent data figures coming out
of the nation. The nation's ETF is actually now in positive
territory for the trailing five year period, meaning it has
recouped some of its losses from the difficult time (see
Why PIIGS ETFs Are Outperforming
Spain still has a ways to go in order to get back to all time high
levels, and it also has a severe problem with unemployment and
debt. Given this, it could still be a very rocky road for the
nation and its stocks.
With that being said, it is hard not to have some optimism over the
Spanish economy right now. Data has come back strong and figures
are better than many other European nations, suggesting that Spain
might be back on track here in the New Year.
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ISHARS-SPAIN (EWP): ETF Research Reports
ISHARS-EMU IDX (EZU): ETF Research Reports
VANGD-FTSE EUR (VGK): ETF Research Reports
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