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Thursday, June 22nd, 2006
Forbes Stock of the Week: "Sipping a Singapore Sling"
Forbes.com Stock Of The Week
Sipping A Singapore Sling
John Dobosz, 06.21.06, 3:35 PM ET
Carl Delfeld, editor of Chartwell Advisor, recommends buying into the iShares MSCI Singapore Index (amex: EWS), the exchange-traded fund representing stocks traded on the Singapore Stock Exchange.
Delfeld calls the Singapore iShares ‰¥þthe highest-quality Asian country ETF.‰¥ÿ The fund‰¥ús holdings are concentrated in the banking industry, with double-digit percentages invested in names such as DBS Group, Oversea-Chinese Banking and United Overseas Bank.
At around $8.40, the Singapore index is down about 14% from its high of $9.75 on May 8. The StraitsTimes index now trades at 14 times earnings. By contrast, before the Asian crisis of 1997, it was at 27 times earnings.
A strong factor underpinning future growth, says Delfeld, is Singapore’s effort to become a global hub of biotechnology research and development, and he is encouraged by the government’s support for helping the industry to blossom.
“From 2000 to 2005, the government‰¥ús financial funding for life sciences R&D was just under $2 billion, and over the next five years the Science & Technology 2010 Plan will commit $5 billion toward economic-driven R&D,” he says.
“Singapore is searching the globe for talent and offers big bucks for scientists to come and conduct research,” he adds, noting that big pharmaceutical companies, such as Merck and Eli Lilly, are already active in Singapore. “Corporate partnerships such as the Singapore-based Novartis Institute for Tropical Diseases are also important for establishing credibility, using resources and attracting talent.”
Even after the correction in the past six weeks, the Singapore index is still up more than 5% for the year, compared to the 4% gain for the iShares MSCI EAFE Index (EFA). The expense ratio is 0.58%.
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