Following a slack outlook for 2013 Polish GDP growth from the
European Commission issued earlier today, the two U.S.-listed
are mixed on the session.
The Market Vectors Poland ETF (NYSE:
), the older of the two funds, is trading modestly higher, while
the iShares MSCI Poland Capped Investable Market Index Fund
) is trading down by just a couple of pennies.
PLND is actually trading higher on volume that is already more
than 10 percent above the daily average. Combining that fact with
EPOL trading only modestly lower on light turnover, and a case
can be made that investors have not found the European Commission
outlook for Poland to be too unsettling.
In the report, the European Commission slashed its outlook for
Polish GDP growth this year to 1.2 percent from a previous
forecast of 1.8 percent. That would be the weakest rate of growth
in 12 years for the Eastern European emerging market,
according to Bloomberg
This is not the first time EPOL, the larger of the two ETFs,
and PLND have shown fortitude in the face of concerning economic
data. Following Poland's third-quarter GDP report, which showed
the lowest growth rate since 2009, the
the two ETFs responded by printing new 52-week
. That report was issued in mid-December.
Still, the past 90-days have been somewhat rough as PLND is
off 0.72 percent and EPOL is down 0.55 percent in that time.
Additionally, the near-term outlook is concerning in the eyes of
"Our model indicates at the moment that Poland's equity market
is in a short term down trend and it is likely its medium term
trend is about to point down firmly. However, the long term trend
is still positive," said Bartlomiej Fraszczyk, a portfolio
manager at London-based Generation Systematic Solutions, in an
e-mail exchange with Benzinga.
Generation Systematic Solutions, a unit of Canadian hedge fund
giant Arrow Capital Management, manages an
emerging markets model portfolio for clients
that includes ETFs such as the Vanguard Emerging Markets ETF
) and the WisdomTree Emerging Market Small-Cap Dividend Fund
). The firm does not currently hold positions in EPOL or
While Poland is not a Eurozone nation, its stocks and the
aforementioned ETFs have, at times, suffered on the thesis that
the Polish economy is heavily dependent on exports to Eurozone
members. In reality, Poland's domestic economy has improved
significantly in recent years, bolstering the long-term bull case
for EPOL and PLND.
"Obviously Poland's economy is not disconnected from the rest
of Europe, however it is more resistant mainly due to a large
demand from its domestic market. During the past 15 years emerged
a strong middle class which drives the internal demand," said
With the near-term outlook for Poland cloudy and diversified
emerging markets ETFs lagging U.S. stocks this year, investors
can wait for better pricing in EPOL and PLND. Interestingly,
those that do decide to get involved will be treated to strong
dividend yields, a fact that often goes ignored when discussing
PLND currently has 30-day SEC yield of 4.29 percent while
EPOL's is 4.78 percent. Both are more than double the 30-day SEC
yield on the iShares MSCI Emerging Markets Index Fund (NYSE:
As for which ETF to pick, Fraszczyk notes EPOL has been the
better performer on a cumulative basis, while saying "although
both products are very similar, initially I would go for the EPOL
and monitor the growth of assets of the PLND."
For more on Poland, click
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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