7 Asia-Pacific ETFs I Wouldn’t Dare Dump Right Now

Rudy Martin

"The primary basis for America’s economic dominance is that it happens to be richly endowed with natural resources."

Long ago, as a somewhat naïve undergrad, I heard that statement from my professor in a required social studies course.

However, my feelings at the time were that America’s prosperity came more from our freedom, diversity and aggressiveness.

The longer I live, the more strongly I feel that my teacher had it wrong.

My Marxist-inspired professor was correct only if you classify Alexander Graham Bell, the Wright brothers, Thomas Edison, Andrew Carnegie, Henry Ford, Bill Gates, Google’s founders and Steve Jobs as "natural resources."

Because most Americans descend from immigrants, I believe those same inventive and entrepreneurial instincts exist all over the planet.

They reach their greatest potential in an accommodating environment.

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While these traits are hard to quantify, I think they thrive in places with these characteristics:

  • ECONOMIC FREEDOM controlled by individual consumers who select products and services that they feel offer maximum value. Government control over an economy stifles this process.
  • EASE OF DOING BUSINESS with minimal interference from government controls and strangulating taxes
  • FREEDOM FROM CORRUPTION that hobbles free trade with non-economic barriers

Recently investors have extremely disenchanted with foreign investments — especially emerging-market equities. This has caused across-the-board dumping of many promising companies that do business in countries that score high marks in the above measures.

You might have exited some of these global stocks. The good news is, many of these assets are bargain-priced right now … and stand to regain their footing once investors realize what values are being created nearly every day that others are completely missing!

Located in arguably the most economically dynamic region of the planet, the seven countries in the nearby table have fertile environments where businesses can grow …

And investors can prosper!

I think investors should take a close look at these seven Asia-Pacific states that provide ultra-fertile soil for economic growth. Some standout attributes you might not have been aware of include:

  • ECONOMIC FREEDOM: Metrics compiled by the Heritage Foundation rank Hong Kong, Singapore and Australia, respectively, as the world’s three most-free economies. Along with New Zealand, they all provide freer economic environments than the 12th-ranked U.S. All seven in the table are in the top quartile of the 178 countries ranked in the study.
  • EASE OF DOING BUSINESS: Rankings by the World Bank show Singapore, Hong Kong and New Zealand as the three most "frictionless" nations on earth for business. Close behind the fourth-ranked U.S. are No. 6 Malaysia and No. 7 South Korea. All seven fall within the top 10% of the world’s countries in this measure.
  • FREEDOM FROM CORRUPTION: Transparency International says New Zealand is the world’s least-corrupt nation. Fifth-ranked Singapore and ninth-placed Australia are deemed less corrupt than 19th-least-corrupt U.S. All seven of the Asia-Pacific countries on the list made the upper third on the 175 nations ranked.

My advice: If you are in the herd that has been selling international holdings, look again at stocks and ETFs covering these countries before you hit the "sell" button.

If you are a "top-down" investor who starts by considering geographic, social and economic factors, then sector, industry, size and finally specific companies, you see what section of the world map I think you should focus on.

Of course, just because these seven nations provide fertile business environments doesn’t mean you should indiscriminately throw assets at these stock markets.

One-time events, developments external to their internal economies and numerous other special factors can affect valuations at any point in time. I consider all these and more when making specific stock and ETF recommendations for my Global Trend Trader subscribers.

Other factors affecting economic and financial performance include:

EDUCATION: Korea ranked second in mathematics, New Zealand seventh and Australia ninth of students from 33 nations. They easily surpassed the 27th-place U.S. ranking. In science, New Zealand placed fourth, Australia fifth and Korea seventh, again easily surpassing the 22nd-place U.S.

GENDER EQUALITY: A nation that underutilizes the talent and efforts of the female half of its population will not be as productive as one where education and opportunities are available to both genders. By this measure, some countries in the Asia-Pacific region have considerable room for improvement.

Below are the newest World Gender Gap Index from the World Economic Forum rankings the Asia-Pacific Seven out of 136 nations surveyed. (The U.S. ranked 23rd, while Hong Kong and Taiwan were not included in the study):

Malaysia and Korea obviously have some work to do in this area. Some economists estimate that a country lagging in gender equality can add a percentage point or more to its GDP growth rate simply by elevating the professional and employment status of women.

One Asia-Pacific nation that seems to be getting things right in this crucial area is the Philippines, which ranked fifth-best in gender equality.

Korean women — and investors! — have some reason for hope. The nation’s first female president, Park Geun, is taking steps to increase the female employment rate from its current 53.5% to a 61.9% goal.

As for investments in these promising Asia-Pacific nations, my experience has been that …

When the Economic Playing Field

is Flat and Fair, Growth Emerges

in Surprising Places.

For that reason, I think the above list of single-country ETFs covering the seven Asia-Pacific nations we have profiled is a good start. Some of these countries have limited exposure of individual stocks listed on major U.S. exchanges, whereas ETFs provide broad, diversified exposure.

Again: Timing and selectivity are crucial, even with diversified ETFs. Their year-to-date and three-month returns indicate that they are generally lower as a result of the indiscriminate selling of international equities in recent months, in addition to net outflows of investor funds.

But over the past five years — and one year for the iShares MSCI New Zealand ETF (ENZL)their percentage gains were in the double-digit teens.

Of course, intensive research of individual stocks produces even selections with even more potential that, when appropriate, find their way into my Global Trend Trader investing service.

Happy Trading!

Rudy

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Your thoughts on “7 Asia-Pacific ETFs I Wouldn’t Dare Dump Right Now”

  1. Excellent article, RM. There seems to be a chart missing under gender equality. The ETF table seems to be where the gen= should be. I made a spreadsheet for the first table, summing the rankings by row. Lowest score wins the race: Australia 23, HK 18, Malaysia 96, NZ 9, Singapore 8, Taiwan 69, USA 35. Singapore and NZ are the winners, by a long stretch. I have lived in Singapore, it is a small tropical island (14 sq mi) heavily populated. It’s potential for growth must be similar to Japan’s, due mostly to human talent and strategic location. NZ is far larger, relatively undeveloped temperate zone islands, sparsely populated. If you were looking for a place to escape, with good future prospects, NZ is looking like a premium choice. Thanks for demonstrating this factoid so cleverly.

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