Sep 11, 2015 Uncategorized Comments Off on Asian Tigers Claw Way Out Of Aug. 24 Sell-Off Hole (Investor's Business Daily)
September 11, 2015
By KEN HOOVER
INVESTOR’S BUSINESS DAILY
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Since the Aug. 24 meltdown, when a massive sell-off in Chinese stocks triggered a global rout, world stock markets have tried to claw their way back to normalcy. Some countries have done better than others.
Among those that have bounced the most are markets in Hong Kong, Taiwan and Japan. What do they have in common besides being Asian markets close to China?
They all have powerful high-tech and financial sectors that continue to see strong demand. Meanwhile, their manufacturing sectors benefit from lower prices for oil and other commodities.
ETFs that track country indexes have also bounced. Since an Aug. 24 intraday low, iShares MSCI Taiwan (ARCA: EWT) has bounced 19.3% through Friday’s close. IShares MSCI Hong Kong (ARCA: EWH) has bounced 11.9%, and iShares MSCI Japan (ARCA: EWJ) recovered 5.2%.
Technology stocks dominate the Taiwan ETF, comprising 55.7% of its holdings, according to Morningstar. Basic materials, which tend to be more sensitive to commodity prices, comprise just 9%. The biggest holding is Taiwan Semiconductor (NYSE: TSM) at 21.9%. The company manufactures computer chips designed by other companies.
Hong Kong is a major financial center in Asia, so it’s no surprise that stocks in the financial sector make up 34.1% of EWH’s total assets. That’s second to real estate stocks at 38.3%. Industrial firms make up just 5.6% of the total.
Many companies on the Hong Kong exchange have considerable operations on the Chinese mainland, so the Hong Kong ETF could be most influenced by what happens in China.
The Japan ETF’s largest sector is consumer cyclicals at 20.4%. Industrials (17.4%), financial services (15%) and technology (11.9%) follow. The top holdings include names familiar to American consumers, such as Toyota (NYSE: TM), Mitsubishi and Honda (NYSE: HMC).
Several foreign stocks that trade as ADRs on U.S. exchanges are recovering and are building the right side of bases. Singaporean chip designer Avago Technologies (NASDAQ: AVGO) is forming the right side of a base and has retaken its 50-day moving average. The emerging base, however, still shows signs of institutional selling as measured by the Accumulation/Distribution Rating.
Denmark’s Novo Nordisk (NYSE: NVO), which specializes in diabetes drugs, and Israeli cybersecurity software maker CyberArk Software (NASDAQ: CYBR) are also building bases.