Chartwell Global ETF Report

Stocks took a breather Friday breaking roughly even after three straight days of gains perhaps looking ahead to the three day weekend. The Commerce Department reported that January housing starts plunged by 14.3% to a seasonally adjusted 1.408 million annual rate, the lowest point in nearly 10 years.

Europe was relatively flat as well while Asian-Pacific stocks ended mostly lower Friday, with Japanese shares losing ground for the first time this week. Stock markets in Taiwan and India were closed for public holidays while financial markets in China and Taiwan will be closed for the entire week beginning Monday for Lunar New Year celebrations. Brazil and Mexico also lost a little ground.

The Powershares Muli Sector ETF (DBO) was the big gainer up 2.43% for the day while the iPath Goldman Sachs Crude Oil ETF (OIL) was up 2.16%. The new Healthshares Diagnostics ETF (HHD) lost ground today losing 1.57% and the ProShares Ultra Technology ETF (ROM) that moves 200% of the Dow Jones US Technology index, was down 1.3% today.

The RAFI fundamental ETFs are going global as Lyxor, which is based in Paris, launched ETFs that act as regional plays for Europe, the US and Japan, based on Rafi indices. There are already nine Powershares Rafi-tracking ETFs listed on the Nasdaq specialising in sectors such as energy, healthcare and financial services. Traditional tracking indexes and ETFs may buy all the companies in a key index and weights them in the ETF basket by their market value. A fundamental tracker weights its holdings according to a company’s fundamental characteristics such as turnover, profits and dividend yield.

While the Rydex CurrencyShares ETFs allow investors the opportunity to bet on seven different foreign currencies, the DB G10 Currency Harvest ETF (DBV) seeks to track the Deutsche Bank G10 Currency Future Harvest Index by entering into long futures contracts on the three G10 currencies with the highest interest rates and entering into short futures contracts on the three G10 currencies with the lowest interest rates.

On Thursday the Dow Jones Industrials were up nicely and the leading ETF for the day was the ProShares Ultra Dow Jones (UXI) which was up 5.17% since it moves 200% of the Dow Jones Industrial index. The iShares Health Care Provider ETF (IHF) was up 2.17%, and continuing its strong performance, the Singapore ETF (EWS) was up 1.82%. Asian markets did well pretty much across the board with the Shanghai Composite up 3%, the Japans Nikkei 225 was up 0.8% on strong fourth quarter GDP numbers, Taipei was up 0.9% and Australia and South Korean markets were both up 0.5% with their respective ETFs tracking these indexes.

Lower oil prices brought the Oil Service HOLDRS (OIH) down 1.9% for the day, and the Powershares Dynamic Oil (PXJ) was down 1.55%. As usual, the most active ETF on the market Thursday was the Nasdaq 100 ETF (QQQQ) with more than 103 million shares traded. It is up 8.3% over the past 52 weeks.

Even though the Swedish central bank or Riksbank - the oldest central bank in the world - raised its benchmark interest rate to 3.25%, the Swedish Krona ETF (FXS) lost about 1% since guidance suggested that the series of rate hikes might well be over. If your image of Sweden and Denmark’s economies is socialistic, bureaucratic and no-growth - you really need to join me as I lead a small group of individual investors to visit Sweden and Denmark during the third week of June 2007. This tour, organized by luxury travel company Abercrombie & Kent, will include a seminar by me on opportunities in both countries, visits to world-class blue chips like Ericsson, Volvo and Danske Bank, a briefing at the Copenhagen and Stockholm stock exchanges as well as the chance to see major historical and cultural sites.

Gold sales hit a record $65.3bn last year and ETFs such as (IAU) have become the main driver of investment demand growth. The launch of several new gold exchange traded funds helped inflows into ETFs rise by 27 per cent in 2006.

Claymore is working on 14 fundamentally enhanced indexes to play on specific investing strategies and ProShares is adding at least 66 new Ultra, Short and UltraShort versions of the style, market-cap and sector indexes. Ultra doubles the returns of the given index. Short and UltraShort offer the inverse and double-the-inverse returns of the index.

The XShares family of exchange-traded funds or ETFs launched five ETFs from its new Health-Shares family on the NYSE: HealthShares Cardio Devices (NYSE:HHE - News), Diagnostics (NYSE:HHD - News), Emerging Cancer (NYSE:HHJ - News), Enabling Technologies (NYSE:HHV - News) and Patient Care Services (NYSE:HHB – News). Fifteen other HealthShares ETFs are on deck for release from now to March. They will invest in companies specializing in dermatology, infectious diseases, metabolic-endocrine disorders and several other areas of medicine.

Labels: Asia

U.S. markets were up Tuesday on some stock-buyback announcements and speculation about M&A activity such as the rumored interest of Australia’s BHP Billiton in Alcoa which also helped the Australian ETF (EWA) reach a fresh high. BHP is the largest holding in the Australian ETF. European shares closed higher on Tuesday as gains from car makers, airlines and miners offset a drop from U.K. property firms. Data out Tuesday showed that economic growth in countries that use the euro jumped 3.3% in the fourth quarter. In Asia, Japan (EWJ) hit a six year high while Hong Kong (EWH) fell back in anticipation of the Chinese New Year (year of the pig).

The Brazil ETF (EWZ) was up 3.13% for the day and the Latin America ETF (ILF) which has 88% of its basket in Brazil and Mexico was up 2.27%. Japan ETFs did well led by the WisdomTree High Yield ETF (DNL) which was up 2.43%. The India exchange-traded note or ETN (INP) was down 1.55%.

While the United Kingdom exchange-traded fund or ETF (EWU) has been doing quite well and the FTSE 100 is at a six-year high, it has been weighed down by the lackluster performance of its mega cap stocks. The twelve largest companies in the index account for a surprising 54% of the index. These dozen companies have underperformed the overall index this year by 6.8%. The Belgium ETF (EWK) has posted total five-year annualized market returns of 23.91%, besting the MSCI EAFE index by 6.42 percentage points.

The South Korean ETF (EWY) was helped today by the North Korean nuclear deal. It is one of the cheapest markets in the region, with a strong currency, reasonable earnings growth and strong economic ties with China not to mention solid 4-5% GDP growth. But a more bureaucratic and pie slicing government has put off investors – especially foreign investors. The business community is eagerly awaiting the upcoming presidential election in December and a new president a year from now.

Tomorrow, China, Russia and Indian foreign ministers will hold a summit in India to discuss who knows what. This is their first trilateral summit and follows Mr. Putins sharp criticism of the United States earlier this week. On Thursday, Li Zhaoxing, China's foreign minister heads to Japan to meet with his counterpart Taro Aso. One topic will surely be issues related to the expected visit to Japan by China's premier Wen Jiabao in April 2007.