Thursday’s ETF To Watch: MSCI Spain Index Fund (EWP)

by on May 17, 2012 | ETFs Mentioned:

The second quarter has been plagued with resurfacing euro fears as a number of nations in the currency bloc have fallen prey to this crisis. At the head of it all is Greece, who has been in financial trouble for several years and has needed not one, but two austerity packages from groups like the EU and IMF. But recent months have seen other countries emerge as having similar issues, leading many to believe that a secession from the euro for several nations is not too far off. Of those who have been struggling, Spain has been one of the hardest hit [see also 5 Things To Watch Out For In International Equity ETFs].

At the end of last month it was confirmed that Spain had officially slipped into a recession, as it had contracted by 0.3%. “Still reeling from the collapse of a property market bubble, Spain is seeking to enact austerity measures to restore government finances, even as it grapples with an unemployment rate of 24.4 percent” writes David Jolly. In fact, Spain’s recession was brought on by eerily similar circumstances to the recent U.S. recession as well as the recession that stuck Japan many years ago and from which the Asian nation has yet to recover [see also Ten Unexpected Observations On YTD ETF Returns].

Today will see non-seasonally adjusted GDP results from the Spanish and while it may not be the most significant piece of data out there, it will certainly have its impact on markets. After a GDP contraction and an official recession, investors around the world will be keeping a close eye on this indicators for where Spain’s economy is headed. The news will be especially important given that the country’s borrowing costs are at a six month high, digging a deeper hole for the Spanish.

In light of today’s report, today’s ETF to watch will be the MSCI Spain Index Fund (EWP). This fund tracks the performance of the Spanish economy and have been trading since 1996. As can be expected, EWP has had a rough year, as the fund has already lost 20% not to mention its five year return of -48%. Today’s GDP report is expected to be revised to -0.4%, which may sink the fund, even if it meets expectations. Keep a close eye on this data release as it will likely dictate EWP’s performance for the day [see also Hitchhiker’s Guide To The ETF Galaxy].

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Disclosure: No positions at time of writing.