Trade war tensions took the global markets into a tailspin in 2018. Even in mid-January, the International Monetary Fund reduced its world economic growth forecasts for 2019 and 2020, pointing out weakness in Europe and some emerging markets, as well as trade tensions.
All the tariff talk started last March. On Mar 1, 2018, President Donald Trump announced his plan to impose a 25% tariff on steel and a 10% tariff on aluminum imports. Then, the move against China was at fever pitch over the course of the year as both countries imposed tit-for-tat tariffs (read: One Year of Trade Spat: 5 ETF Winners).
So far, the United States has imposed tariffs on $250 billion worth of imports from China, while Beijing has retaliated with tariffs on $110 billion worth of U.S. goods, per the source. Though things started improving from 2019 with both countries negotiating hard and there are chances that Trump and China’s president Xi Jinping could strike an official trade deal at a summit around Mar 27 (per the Wall Street Journal report on Sunday), the material impact that the dispute had on global markets in 2018 cannot be overlooked(read: 10 ETF Areas to Gain as Trump Delays Additional Tariffs).
Several countries suffered due to these tariff issues, especially China. Against this backdrop, we would like to note the country ETFs that hung in there through the heightened yearlong trade tensions and returned in double digits (per xtf.com).
iShares MSCI Saudi Arabia ETF (KSA - Free Report) – Up 22.5%
Saudi Arabia stocks benefited from higher oil prices in a considerable part of 2018. Also, increased spending by the government probably helped in boosting Saudi stocks. Index provider FTSE Russell has included many Saudi stocks on its global equity index this year, a move that is expected to haul in $500 million of inflows. FTSE Russell is also set to include Saudi Arabia’s stocks on the emerging market index in five phases. Saudi Arabia’s stock exchange expects passive fund inflows of $15 to $20 billion this year (read: EM Equities ETFs Off to a Great Start in 2019: Here's Why).
iShares MSCI Qatar ETF (QAT - Free Report) – Up 22.0%
Another gulf country – Qatar – has shown sturdy performances during the past one year. There were increased buying interests from foreign and domestic institutions. There was an increase in foreign ownership limit in some companies, which is deemed to be resulting in such huge interests.
Global X MSCI China Energy ETF (CHIE - Free Report) – Up 13.6%
Energy stocks have gained occasionally in the past year. Output cuts by OPEC and Russia for the first six months of the year, U.S. sanctions against Iran and Venezuela, and hopes of U.S.-Sino trade truce that have led to anticipation of higher demand for oil in the world’s second-largest economy boosted oil prices and this energy fund.
iShares Currency Hedged MSCI Switzerland ETF (HEWL - Free Report) – Up 13%
The underlying MSCI Switzerland 25/50 100% Hedged to USD Index consists of stocks traded primarily on the Zurich Stock Exchange with the currency risk of the securities included on the Underlying Index hedged to the U.S. dollar on a monthly basis.
The Swiss economy seems to be better-placed in the European block. After some years of lackluster growth, the Swiss economy grew 2.5% in 2018 thanks to a positive global situation. The growth missed expectations (+2.6%) by a whisker, but came in way sturdier than 2017’s growth rate of 1.6%. However, the Swiss government is more skeptical about prospects for this year, and could cut its forecast for 2019 growth.
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