INTERMARKET REVIEW
iShares are an investment product from Barclay's Global Investors,
and represent among the broadest variety of exchange-traded funds (ETFs)
available to institutional and retail investors alike. iShares can be bought
and sold like stocks and are used by many investors instead of mutual funds
in order to take advantage of the low expenses involved in trading ETFs.
The MSCI Sweden Index Fund (EWD)
The MSCI Sweden Index Fund (EWD) is built to provide investors and traders
with exposure to the equities of companies operating in and out of Sweden.
The fund is geared to mirror the performance of the publicly traded stocks
of the Swedish stock market as represented by the MSCI Sweden Index. Major
components of EWD include Telefonaktiebolaget LM Ericsson Class B, Nordea
AB, Hennes & Mauritz AB Class B, and Volvo AB Class B. Top industry
sector representation consists of technology hardware and equipment, capital
goods, and banks.
The Swedish stock market, as represented by the MSCI Sweden Index Fund,
has enjoyed a bull market ever since breaking out above its 20- and 50-week
moving averages in the late spring of 2003. The exemplary uptrend topped
temporarily at the beginning of 2004. However, after some sideways movement
through much of 2004, the EWD was back to its bullish ways - setting a
new multiyear high with a breakout in October.
What they say: "But rather than remain a failed economic
model, Sweden has in the past decade - and under Mr. Persson"s leadership
since 1996 - remodeled and refinanced its welfare system, offering an example
to countries such as Germany that wish to preserve valued social institutions
but bring public spending under control. Sweden"s economic growth over
the past decade has easily outpaced that of Germany and the average for
the members of the Eurozone." - "Can Germany Learn From How Sweden Revived
Its Ailing Economy?" Ralph Atkins and Nicholas George, Financial Times,
October 20, 2004.
MSCI France Index Fund (EWQ)
The MSCI France Index Fund (EWQ) is designed to provide investors and
traders with exposure to the equities of companies operating in and out
of France. The fund is geared to mirror the performance of the publicly
traded stocks of the French stock market as represented by the MSCI France
Index. Major components of EWQ include Total SA, Sanofi-Aventis, Bnp Paribas
SA, France Telecom SA, and Vivendi Universal SA. Top industry sector representation
consists of energy, banks, and pharmaceuticals and biotechnology.
As represented by the MSCI France Index, the French stock market bottomed
in the spring of 2003 and has been in bull market mode for well over a
year. While it appeared as if French stocks had topped early in 2004, it
now appears to have been little more than a trading range before a renewed
push higher. In recent weeks, EWQ has even managed to establish a new multiyear
high vis-à-vis its previous January 2004 "peak."
What they say: "[French President Jacques] Chirac has
brought a large business delegation on the trip which is heavily focused
on trying to secure greater access for French firms to Chinese markets.
During his speech in Chengdu, Chirac in particular talked up the French
nuclear power industry, aircraft manufacturer Airbus Industrie and French
expertise in building high-speed trains. A number of contracts were to
be signed during the visit which may help to redress France"s trade deficit
with China, which currently stands at around six billion dollars." - "Chirac
Urges French Business To Grasp Huge Opportunities In China," TurkishPress.com,
October 9, 2004.
MSCI Germany Index Fund (EWG)
The MSCI Germany Index Fund (EWG) is designed to provide investors and
traders with exposure to the equities of companies operating in and out
of Germany. The fund is built to mirror the performance of the publicly
traded stocks of the German stock market as represented by the MSCI Germany
Index. Major components of EWG include Siemens AG, Deutsche Telekom, Deutsche
Bank, and DaimlerChrysler AG. Top industry sector representation consists
of utilities, capital goods, and automobiles and their components.
EWG has not set a new multiyear high as has its cohort in Sweden or
France. But EWG's price appreciation over the past year and a half is equally
remarkable - if not more so. After marking a bottom in March 2003 near
$8 per share, EWG went on to double by January 2004. The EWG made an initial
top at the time, and then slipped into a bearish consolidation range until
the late summer. Since that time, EWG has rallied back above its 50-week
moving average.
What they say: "Will globalisation see the shrinking of
German car production from 5.5m cars a year to around 3m, closer to that
of France and Spain? That seems to be the trend now that cheaper manufacturers
can be found in central Europe. Meanwhile, Germany will attempt to turn
itself into more of a service economy like Britain. New job prospects for
former car workers are not great. The government"s job-creation schemes
remain the least convincing of its reforms." - The Economist, "The Day
The Factories Stopped," October 23, 2004.
MSCI United Kingdom Index Fund (EWU)
The MSCI United Kingdom Index Fund (EWU) is built to provide investors
and traders with exposure to the equities of companies operating in and
out of the United Kingdom. The fund is designed to mirror the performance
of the publicly traded stocks of the United Kingdom's stock market as represented
by the MSCI United Kingdom Index. Major components of EWU include British
Petroleum, Hsbc Holdings, Vodafone Group, GlaxoSmithKline, and the Royal
Bank of Scotland. Top industry sector representation consists of banks,
energy, pharmaceuticals, and biotechnology.
Along with the other European exchange-traded funds noted here, the
Ewu has also enjoyed a powerful bear market since its bottom in March 2003.
Topping with most indexes and averages in January 2004, the EWU not only
managed to remain above its 50-week moving average, but also went on to
set new multiyear highs in recent weeks.
What they say: "The number of Britons having debt problems
has 'risen significantly', Citizens Advice has said. The charity, which
runs a chain of advice centers, said the number of people asking for help
with debt rose by 35,000 in the past year to 706,000. Citizens Advice blamed
irresponsible lending for the rise and said UK credit laws must be changed
urgently. However, a banking body said that the charity was 'stereotyping"
lenders and that law changes should not be rushed. In July, UK personal
debt topped the £1 trillion mark for the first time." - BBC News.com,
" 'Significant" Rise In Debt Woes," October 29, 2004.
Excerpted from an article originally published in the March 2005
issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights
reserved. © Copyright 2005, Technical Analysis, Inc.
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