As the dollar continues to show signs of weakness and the U.S. is digging itself out of a recession, many have turned to Asia making the emerging continent a headline amongst many.
Asia has drawn attention due to its large growth rates and its ability to emerge out of the global recession with a V-shaped recovery. Take Hong Kong for example, whose economy grew at a seasonally adjusted 3.3% in the second quarter of the year and China who is expected to grow at a rate of 8% for the year. These nations have been able to pull themselves up by their boot straps, mainly due to fiscal stimulus plans which accounted for nearly 4% of GDP and were higher than any other region of the world.
Government stimulus packages have been successful in Asian nations due to low consumer debt, and a high propensity to save. This way of life has led these nations to further develop and enable incomes to rise, which will likely cause the domestic demand for goods and services to increase as well. In fact, demand from domestic consumption is expected to add nearly 7% to the growth rate of the smaller emerging nations of Asia.
To add to the region’s attractiveness, most nations have kept unemployment rates relatively tame, many big technology companies in the region are increasing capital expenditure projections, and the International Monetary Fund has openly stated that it expects the region as a whole to continue to grow.
Lastly, Asian nations are diligently working together to construct an agreement that will free up trade. Over time, this will help the region by lowering economic barriers, further enabling nations to develop more efficient economies of scale. Additionally, the agreement could potentially increase the inflow of foreign direct investment which could further lead to technological advancements and even more economic growth.
For most, when they speak of Asia they think of Japan, China and India, but it is just as easy to gain access to the region’s other markets, which will probably show even more prosperity, through the following ETFs:
- iShares MSCI Hong Kong Index (EWH), which carries an expense ratio of 0.52% and gives exposure to Hong Kong which has benefited from China’s growth and stimulus package.
- iShares MSCI South Korea Index (EWY), which has an expense ratio of 0.63% and gives great exposure to South Korea which is heavily reliant on China and is highly correlated with developed nations.
- iShares MSCI Singapore Index (EWS), which has an expense ratio of 0.52% and relies on manufacturing, which is expected to see signs of recovery.
- iShares MSCI Taiwan (EWT), which has an expense ratio of 0.63% and is being bolstered by exports to China, low interest rates and stable consumer prices.
