Single Country ETFs: A Closer Look At The Market Vectors Indonesia ETF (IDX, EWJ, FXI, EWS, EWM, EWY)
David Gillie: Indonesia is not only the paradise of the Eastern Hemisphere, Bali, but it is also a paradise for investors in their robust economy. GDP in Indonesia for 2011 was $823 Billion Dollars (est). To put that in perspective, Indonesia’s GDP is larger than Sweden’s and Argentina’s. Almost four times larger than Hong Kong’s GDP and just slightly less than Australia’s. Growth in 2011 was at 6.2% (est). Indonesia is bountiful in resources including; oil, gas, bauxite, silver, tin, copper, gold, coal, timber, rubber, rice, palm oil, coffee, garments, footwear, furniture, paper products and electronics.
Indonesia’s major export partners are Japan (NYSEARCA:EWJ), US, China (NYSEARCA:FXI), Singapore (NYSEARCA:EWS), Malaysia (NYSEARCA:EWM) and S. Korea (NYSEARCA:EWY)—making them distant from the fragile economy of Europe.
Indonesia’s 240 million people (2009 census) make it the world’s 4th most populous nation.
So where is this little island of Indonesia?
This “little island” is actually over 17,500 islands, has the land mass three times the size of Texas and spans a geographic area as wide as China.
Virtually the only way the average investor can access this wealth is Market Vectors Indonesia Index (NYSEARCA:IDX)
IDX is an ETF that tracks the Indonesia Index.
Of the top ten holdings in IDX, only one is traded on the NYSE. Thanks to the world of ETFs, average traders can now have exposure to this nation rich in resources and economy. The Indonesia Index is weighted in financials. This allows exposure to all aspects of their commerce through the major banking institutions. This also reduces the volatility of the commodity driven economy.
Since its inception in 2009, IDX had a vertical climb of nearly 500%. This apparently was no accident. During its pullback in Augustn2011, it went from $34 to a low of $22 and quickly regained its move up.
An 8.62% gain over the past year may not seem like a killing, but it’s 8.62% better than the US market performed.
IDX has just undergone a significant technical event. It has broken out of a wedge pattern to the upside. This is further a bullish event because it broke through the 200 day moving average resistance on strength and held.
The MACD is also showing a positive, steady climb in IDX since early December. The August pullback had nothing to do with Indonesia, but rather a widespread retreat in US markets. For investors, this just showed us the strength of IDX as it quickly recovered from the sell-off. Although the 52 week high of $34 was achieved just before the sell-off, this is unlikely to be the extent of IDX’s potential. More like an interruption of its spectacular trajectory.
IDX is a solid position to access the Asian commodity market.
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