With the second quarter quickly coming to a close, uncertainty looms large on the investing horizon. The odds of a sovereign debt crisis in Europe are constantly in flux. Conflicting data reports on the state of the U.S. economy have clouded expectations for domestic equity markets. And the latest developments out of Beijing are just beginning to ripple through the global economy. The next month will no doubt be a critical period for investors, starting with a week full of important data releases, international summits, and central bank meetings. Below, we profile three ETFs that figure to be in focus over the next several days (for more ETF ideas, sign up for our free ETF newsletter):
iShares MSCI South Korea Index Fund (EWY)
Why EWY Will Be In Focus: Index provider MSCI Barra, which maintains many of the benchmarks to which popular exchange-traded products are linked, is scheduled to release the results of its 2010 Market Classification Review on Monday morning. Last year, MSCI upgraded Israel from “emerging” to “developed” status, while electing to leave South Korea and Taiwan as components of the MSCI Emerging Markets Index. An upgrade of these economies in this year’s review could spark a sell-off from emerging markets ETFs and index funds (see The Ticking Time Bomb Under EEM).
WisdomTree Dreyfus Chinese Yuan Fund (CYB)
Why CYB Could Be In Focus: After months of speculation and international commentary surrounding China’s currency policy, Beijing made a surprise announcement on Saturday night. The government declared that its exchange rate would become more flexible, ending a two-year peg and setting the stage for the yuan to appreciate against the U.S. dollar. “China is now speeding up the restructuring of the economy and transforming its growth model, a task that has been made even more important and urgent by the international financial crisis,” said the central bank in a statement released a week ahead of a G-20 meeting in Toronto at which the yuan’s value was expected to be a primary issue.
The development was cheered by the international community, but the details of the proposed currency flexibility are still hazy. Chinese censors were active over the weekend in silencing outrage over a perceived concession to the West, making the magnitude and timing of the yuan’s appreciation somewhat unclear. CYB seeks to achieve total returns reflective of both money market rates in China available to foreign investors and changes in value of the Chinese Yuan relative to the U.S. dollar, and will likely see significant interest this week.
Market Vectors Poland ETF (PLND)
Why PLND Will Be In Focus: Two months after a tragic plane crash claimed the lives of Poland’s president and several other top government officials, voters in the only European country to post economic expansion last year headed to the polls to choose between two very different candidates (see Poland ETFs In Focus Ahead Of Critical Election). Exit polls showed interim president and parliament speaker Bronislaw Komorowski leading Jaroslaw Kaczynski, but coming up short of the 50% needed to avoid a runoff. Komorowski is generally seen as the more market-friendly candidate, a proponent of integrating Poland’s economy with the rest of Europe.
Disclosure: No positions at time of writing.