International ETF Update: Brazil, India, Malaysia
Wal-Mart Seeks Expansion In Brazil, Taking ETF Shopping
Wal-Mart (WMT) is looking to expand in Brazil, where it is the third-largest retailer, in hopes that Brazilians will shop till they drop.
Wal-Mart is looking to invest $1.1 billion into the country in 2009, which is up 50% they planned to spend this year, reports Fabiola Moura for Bloomberg. This will be the largest investment endeavor since the company entered the country in 1995.
In Brazil, economic growth may be at a snail’s pace, but gross domestic product is likely to expand at more than twice the pace of the United States’. In 2009, more than 90 new stores are planned, up 28% from the 318 stores open now. It also may generate 9,000 new jobs.
iShares MSCI Brazil Index (EWZ) is down 9.6% year-to-date.
Wal-Mart is riding a wave of success lately, thanks to its position as a discount retailer that consumers have turned to when budgets have been tight. The company’s second-quarter profit has risen 17%, reports Anne D’Innocenzio for the Associated Press. The world’s largest retailer predicted slower sales growth at established stores for the third quarter, however.
Labor groups are looking into an investigation into whether the company violated federal election laws by telling employees that electing Democrats would lead to passage of legislation making it easier to unionize companies, report Kris Maher and Ann Zimmerman for the Wall Street Journal. The company opposes this, and no company is permitted to expressly advocate to hourly employees the election or defeat of specific candidates.
India and ETFs Are Benefiting From Action in the U.S.
For the month of June, India’s production was up, and ETFs focused on this rising country reaped the rewards of this growth.
Before the higher interest rates and consumer spending crimp, factory output and activity in mines and utilities in India rose 5.4% from one month earlier, reports Kartik Goyal for Bloomberg. This growth spurt may slow, as the central bank has raised borrowing costs to curb runaway inflation.
Factory output accounts for nearly 25% of India’s $912 billion economy.
As India is the biggest buyer of bullion, the country’s gold imports may raise for the first time in almost a year, as the lower price of gold is set to attract buyers. Purchases may also rise as jewelers restock inventories and the festival season begins later this month, Thomas reports Kutty Abraham for Bloomberg. Buyers who have put off purchases will enjoy and revel in the lower prices of gold.
Meanwhile, cost-cutting in New York in the form of outsourcing is turning out to be India’s gain. Banks are outsourcing data-intensive jobs from higher up the food chain to cities that cost less than New York, Hong Kong and London, reports Heather Timmons for the New York Times.
“Knowledge process outsourcing,” as bank executives call it, is a way to sugarcoat the job losses here in the United States. The jobs gone are those that involved long hours of number crunching, typically done by business school grads. These third-party firms are reporting that they’re seeing a 20% to 40% upswing in business in this year alone. Many of this country’s major banks have hundreds people in India doing research and statistical analysis.
- iPath MSCI India Index ETN (INP): down 37.6% year-to-date; up 18.9% in the last month
- WisdomTree India Earnings (EPI): down 21.1% Feb. 26; up 14.2% in the last month
- PowerShares India (PIN): down 15.1% since March 5 inception; up 13.1% in the last month
Will Malaysia and ETF Get a Helping Hand In U.S. Recovery?
The Malaysian economy has come to a fork in the road, and economists are wondering how isolated the country’s economy is from that of the United States’, and what this means for investors of the ETF.
Some economists have reveled in the fact that the Malaysian economy has gone through a decoupling of sorts from the U.S. economy. But it’s imperative for policymakers and local investors to be on guard about the possible bumps in the road that could form, as Malaysia’s exports to the States accounts for 16% of the country’s total exports, reports Shankaran Nambiar for The Star.
And interestingly, 15% of Malaysia’s exports go to Singapore, but a substantial portion of those exports ultimately wind up re-routed to the United States.
In 2001, the dot-com bubble burst and the growth rate in Malaysia went down to 0.5%, so this fact alone is keeping analysts on the cautious side. This also voids any notion that the Malaysian economy is totally separate from that of the United States’. Our current woes here have Malaysians concerned.
It’s perhaps with good reason, as iShares MSCI Malaysia (EWM) is down 22.6% year-to-date.
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- moneysurf
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Aug 15 10:53 AM