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If Jobs Matter, Then These Country ETFs Could Surge
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Many prognosticators describe the dire jobless recovery, then follows it up with bearish outlooks on the S&P 500. Similarly, you’ll read how increases in business confidence are a precursor to hiring… ergo, the cyclical bull for stocks has further to stampede.
When did stock market analysts become so one-dimensional? At one point did jobs… or even the broader economy… receive an award for outstanding achievement in the field of market directionality. (Yes, there’s a Simpsons reference in there for animation enthusiasts.)
Nevertheless, if we presuppose that good things flow for the stocks of companies that plan to hire new workers, then we should take particular note of Manpower’s worldwide hiring survey. In it, the employment services firm found that 3/4 of all countries had more companies that expected to hire than fire in the coming 3 months.
Three of the countries with the largest proportion of hirers to firers? Brazil, India and Singapore. Three countries with a larger proportion of firers to hirers? England, Spain and Italy.
If you like the upward job trending approach, then you might take a look at Small Cap Brazil (NYSE: BRF), which targets the local Brazilian economy through a large allocation to consumer stocks. India and Singapore do not necessarily have small-cap alternatives, but iShares MSCI Singapore (NYSE: EWS) and WisdomTree India (NYSE: EPI) should do well in the “jobs matter” scenario.
If, however, you see more opportunity in the most troubled economies, iShares MSCI Spain (EWP) and iShares MSCI Italy (NYSE: EWI) might be in your sights. Indeed, P/E ratios for these battered ETFs are 20%-25% lower than those of the emerging markets mentioned earlier.
Perhaps ironically, over the last 1 month alone, Spain (EWP) and Italy (EWI) have outperformed. Yet the last month has reflected buying off of a correction’s bottom plus reassurances about the EU’s commitment to Greece.
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Disclosure Statement: ETF Expert is a web log (”blog”) that makes the world of ETFs easier to understand. Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. The company and/or its clients may hold positions in the ETFs, mutual funds and/or index funds mentioned above. The company does not receive compensation from any of the fund providers covered in this feature. Moreover, the commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.
