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Worries About US Growth Slowdown? 3 Asia ETFs Look Appealing
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In the first quarter of 2024, the U.S. economy experienced its slowest growth in two years, with both consumer and government spending cooling. From January to March 2024, the U.S. gross domestic product (GDP) grew at an annualized rate of 1.6%, falling short of Wall Street's anticipated increase of 2.5%.
The data has ignited concerns among investors, particularly due to a faster-than-expected acceleration in inflation. And a surge in inflation raised doubts about the sooner-than-expected U.S. interest rate cuts. (read: 4 ETF Areas to Play Amid Slower Growth & Rising Inflation).
In fact, chances of higher-for-longer U.S. interest rates weighed on Wall Street in April. The S&P 500 has lost 2.9% in the past one month. Although decent earnings from big tech companies and their significant investments in AI boosted Wall Street last week, many market watchers expect volatile trading ahead.
Against this backdrop, investors might consider exploring ETFs from other countries that currently appear appealing. These countries include Japan, India, and China, offering a variety of ETFs for investors based on those regions. Below, we highlight key ETFs from these areas.
Country ETFs in Focus
Japan – WisdomTree Japan Hedged Equity Fund (DXJ - Free Report)
After years of stagnation, Tokyo's Nikkei 225 index surged past its 1989 peak on February 22, 2024. Years of easy money policy, stable political environment and the late Prime Minister Shinzo Abe’s fiscal policy "Abenomics" have contributed to the rejuvenation of Japan's equity markets (read: Can the Record Rally in Japan ETFs Continue?).
Government-led reforms incentivized companies to enhance corporate governance practices and allocate capital more efficiently. This resulted in notable increases in dividends, share buybacks, and the reduction of cross-shareholdings. The recent decision by the Bank of Japan to raise interest rates, ending years of negative rates, signifies Japan's departure from its deflationary past.
The yen's depreciation to a 34-year low against the dollar has provided a boost to Japanese exporters, enhancing their sales and profitability. Currency-hedged ETFs have notably outperformed their unhedged counterparts and the S&P 500 index, reflecting the benefits of the currency decline.
India – WisdomTree India Earnings ETF (EPI - Free Report)
India is undergoing general election. The process will continue in May as well. Votes will be counted on June 4. In the election, the market-friendly prime minister Narendra Modi is expected to win another term. Modi's tenure has seen significant investments from U.S. tech giants in India.
Investors should note that sustaining a growth rate above 7% for a third consecutive year, particularly amid backdrop of a global slowdown, could significantly enhance Modi's chances of securing a third term.
The International Monetary Fund (IMF) recently upped India’s GDP growth projection for 2024-25 by 30 basis points to 6.8% in its update to the World Economic Outlook (WEO), citing resilient domestic demand. IMF forecast a 6.5% expansion for the next fiscal year 2025-26. Upbeat growth and likely election tailwinds are likely to boost India ETFs in the near term.
Chinese shares have been beaten down lately due to the government’s anti-growth policies, stringent COVID-19 restrictions, and the real estate crisis. But it looks like that Chinese equities have bottomed. With dirt-cheap valuations, increased buyback activities by Chinese tech giants, and favorable technical indicators, the market is showing signs of recovery.
In Hong Kong, stocks have recently entered a bull market, having surged 20% from their recent low. This rally has been fueled by positive corporate earnings announcements and official efforts to invigorate China's ailing property sector.
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Worries About US Growth Slowdown? 3 Asia ETFs Look Appealing
In the first quarter of 2024, the U.S. economy experienced its slowest growth in two years, with both consumer and government spending cooling. From January to March 2024, the U.S. gross domestic product (GDP) grew at an annualized rate of 1.6%, falling short of Wall Street's anticipated increase of 2.5%.
The data has ignited concerns among investors, particularly due to a faster-than-expected acceleration in inflation. And a surge in inflation raised doubts about the sooner-than-expected U.S. interest rate cuts. (read: 4 ETF Areas to Play Amid Slower Growth & Rising Inflation).
In fact, chances of higher-for-longer U.S. interest rates weighed on Wall Street in April. The S&P 500 has lost 2.9% in the past one month. Although decent earnings from big tech companies and their significant investments in AI boosted Wall Street last week, many market watchers expect volatile trading ahead.
Against this backdrop, investors might consider exploring ETFs from other countries that currently appear appealing. These countries include Japan, India, and China, offering a variety of ETFs for investors based on those regions. Below, we highlight key ETFs from these areas.
Country ETFs in Focus
Japan – WisdomTree Japan Hedged Equity Fund (DXJ - Free Report)
After years of stagnation, Tokyo's Nikkei 225 index surged past its 1989 peak on February 22, 2024. Years of easy money policy, stable political environment and the late Prime Minister Shinzo Abe’s fiscal policy "Abenomics" have contributed to the rejuvenation of Japan's equity markets (read: Can the Record Rally in Japan ETFs Continue?).
Government-led reforms incentivized companies to enhance corporate governance practices and allocate capital more efficiently. This resulted in notable increases in dividends, share buybacks, and the reduction of cross-shareholdings. The recent decision by the Bank of Japan to raise interest rates, ending years of negative rates, signifies Japan's departure from its deflationary past.
The yen's depreciation to a 34-year low against the dollar has provided a boost to Japanese exporters, enhancing their sales and profitability. Currency-hedged ETFs have notably outperformed their unhedged counterparts and the S&P 500 index, reflecting the benefits of the currency decline.
India – WisdomTree India Earnings ETF (EPI - Free Report)
India is undergoing general election. The process will continue in May as well. Votes will be counted on June 4. In the election, the market-friendly prime minister Narendra Modi is expected to win another term. Modi's tenure has seen significant investments from U.S. tech giants in India.
Investors should note that sustaining a growth rate above 7% for a third consecutive year, particularly amid backdrop of a global slowdown, could significantly enhance Modi's chances of securing a third term.
The International Monetary Fund (IMF) recently upped India’s GDP growth projection for 2024-25 by 30 basis points to 6.8% in its update to the World Economic Outlook (WEO), citing resilient domestic demand. IMF forecast a 6.5% expansion for the next fiscal year 2025-26. Upbeat growth and likely election tailwinds are likely to boost India ETFs in the near term.
China – iShares China Large-Cap ETF (FXI - Free Report)
Chinese shares have been beaten down lately due to the government’s anti-growth policies, stringent COVID-19 restrictions, and the real estate crisis. But it looks like that Chinese equities have bottomed. With dirt-cheap valuations, increased buyback activities by Chinese tech giants, and favorable technical indicators, the market is showing signs of recovery.
In Hong Kong, stocks have recently entered a bull market, having surged 20% from their recent low. This rally has been fueled by positive corporate earnings announcements and official efforts to invigorate China's ailing property sector.