The Miracle on the Han River, also known as South Korea, is an impressive story. South Korea is the 15th largest economy in the world and home to the second largest metropolitan area in the world, Seoul. Additionally, South Korea is a world leader in ship building, automobile manufacturing and steel manufacturing. Where South Korea really shines is in the world of high technology. Ever heard of Samsung? According to the Economist Intelligence unit, in 2007, South Korea ranked third in the world in IT competitiveness.
Stepping on the gas peddle
According to Seyoon Kim of Bloomberg.com, The Bank of Korea raised forecasts for GDP this year and next. The cause of the increase is interest-rate cuts, government stimulus and demand for exports. South Korea is one of the top 15 largest exporters in the world. Bloomberg’s Kim also notes that Hyundai Mobis Co., recently made a deal worth $70 million to supply fog lamps to Chrysler. Earlier in July, Bloomberg’s Kim wrote about the intention of Korea to raise interest rates in November. This would make them the first Asian Central bank to begin policy easing.
Getting in on the action
Not surprisingly, the iShares South Korea ETF (ticker EWY) has been one of the strongest single country ETFs thus far YTD. The fund is up over 28% YTD and is above both its 50 and 200 day EMA. Additionally, a strong lagging indicator is pointing upward and that is the 50 day EMA has crossed above the 200 day EMA recently. Not surprisingly, EWY is heavy in technology with approximately 27% of the portfolio in IT of which the lion’s share is in Samsung. With 99 total holdings, even though heavy on tech the fund has significant exposure to industrials, financials, and materials.
Chart courtesy of StockCharts.com
Disclosure Statement: ETFGPS is a blog that Navigates The World of ETFs. Sustainable Investment Strategies LLC is a Registered Investment Adviser in the State of Maryland, and may hold positions in the ETF(s) listed above. Investors who are interested in money management services may visit the Sustainable Investment Strategies LLC web site.
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