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ETFs to Target Attractive Opportunities in Asia


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The emerging markets have staged a strong rebound this year and look to maintain their momentum. However, not all developing countries are the same, and exchange traded fund investors may find varying opportunities among the various regions.

"Emerging markets are not homogenous in our opinion and we believe it is important to take a targeted approach to selecting the equity opportunities that do exist. Within EM, we are particularly focused on select market segments in Asia ex-Japan, including China and India," according to a BlackRock research note.

Investors who are interested in gaining exposure to the growth opportunity in the Southeast Asia region can look to various ETF options, such as he iShares MSCI All Country Asia ex Japan ETF (NYSEArca: AAXJ), which excludes Japanese and Australian stock exposure and tilts toward more emerging economies, including China 39.0%, Korea 17.6%, Taiwan 13.5%, India 9.8%, Hong Kong 5.8%, Singapore 4.0%, Indonesia 2.6%, Thailand 2.5%, Malaysia 2.5% and Philippines 1.3%.

Additionally, the SPDR S&P Emerging Asia Pacific ETF (NYSEArca: GMF) provides broad exposure to emerging economies in the Asian Pacific, including China 47.3%, Taiwan 20.7%, India 18.1%, Thailand 4.1%, Malaysia 3.6%, Indonesia 3.6%, Philippines 1.8%, Hong Kong 0.5%, Pakistan 0.3% and Singapore 0.1%.

Investors can also gain more targeted exposure to emerging countries, including China and India, through country-specific ETFs. For example, the iShares China Large-Cap ETF (NYSEArca: FXI) is the largest China-related ETF and tracks Chinese companies listed on the Hong Kong stock exchange. Similarly, other China H-shares ETFs options include the SPDR S&P China ETF (NYSEArca: GXC) and the iShares MSCI China ETF (NYSEArca: MCHI).

Investors can also access Chinese markets or China A-shares that trade on mainland directly through options like the VanEck Vectors ChinaAMC SME-ChiNextETF (NYSEArca: CNXT), iShares MSCI China A ETF (BATS: CNYA) and db X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR).

Additionally, for India country exposure, ETF investors can look to options like the iShares MSCI India ETF (BATS: INDA), PowerShares India Portfolio (NYSEArca: PIN) and WisdomTree India Earnings ETF (NYSEArca: EPI), which have have also notched impressive performances this year.

BlackRock also pointed out that many of these emerging countries and the broader emerging markets  look much more attractive on a valuation standpoint relative to developed markets,  notably the U.S. Specifically, BlackRock showed that Russian markets were among the cheapest on the global markets. For instance, the VanEck Vectors Russia ETF (NYSEArca: RSX), the largest Russia ETF trading in the U.S., is trading at a 8.18 price-to-earnings and a 0.79 price-to-book, and the iShares MSCI Russia Capped ETF (NYSEArca: ERUS) shows a 7.15 P/E and a 0.73 P/B, while the S&P 500 is hovering around a 20.6 P/E and a 2.94 P/B. The broader iShares MSCI Emerging Markets ETF (NYSEArca: EEM), which tries to reflect the performance of the benchmark MSCI Emerging Market Index, is trading at a 12.9 P/E and a 1.61 P/B.

This article was provided courtesy of our partners at etftrends.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article was provided by our partner Tom Lydon of etftrends.com.



This article appears in: Investing , ETFs , Investing Ideas , World Markets


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