When managing our Global, International, and Tactical Asset Preservation ETF Portfolios, we adhere strictly to a relative strength process, because we have found no way to invest in ETFs using fundamentals given currency fluctuations, the stock market behaviors of different regions, the sizes of countries, and the sector weights in various countries. A P/E in one country means nothing in another. However, it is helpful to expand your knowledge of the exciting opportunities around the globe. The world is an amazing place.
According to our relative strength process, Thailand, Sweden (and the rest of the Nordic Region), and Indonesia are ranked nearest to the top.
The MSCI Thailand Index is up 48.9% over the past year, and despite the political protests that took place in the country last year, the economy remains strong. Relative strength (ranked at 100%) has served us well and kept us in this country as fiery pictures came across the newswire.
GaveKal recently produced a great report on the financial mess that the Scandinavian countries experienced in the 1990s. At that time public spending was nearing 70% of GDP, and a crisis (reminding me a little of the US and Europe today) was upon them. So, what did they do? They deregulated labor markets and dramatically reduced the size of the government. And today, these countries have strong balance sheets and strong economies. Furthermore, their stock markets are performing strongly, with the MSCI Sweden Index up 42.6% over the past year, and the remaining Nordic Region countries up about 20% to 30% over the same time period. So, it makes sense that Sweden's relative strength is 98% and the Nordic Region as a whole has a relative strength of 97%.
Lastly, Indonesia's economy is extremely strong, as it is ranked as the largest in Southeast Asia and a member of the G-20. While some questions currently surround the unity of Indonesia's government, the country is ranked with relative strength at 95%. Furthermore, the country's stock market, as measured by the MSCI Indonesia Index, is up 31.9% over the last year.
Hays Advisory uses relative strength to identify those countries whose stock markets are on the move, and underlying these great stock markets, we generally discover very interesting stories. We believe the Global Technology Revolution will continue to provide new and great places for investment consideration, and we hope that you will join us.
To view today's complete Global Market Comment, click here.
Keith A. Hays
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