Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
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The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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| iShares
Mexico Fund (EWW) |
Published: August 2, 2004
The MSCI iShares Mexico Fund (symbol EWW) is an
exchange-traded fund that invests in a basket of some of Mexico's
largest firms. The fund tracks the Morgan Stanley Capital International
Mexico Index. As of June 30th, EWW held shares in 28 companies, with the
largest 10 holdings making up 76.46% of the value of the fund.
The fund's two largest holdings, America Movil (AMX) and Telefonos de
Mexico (TMX) account for 21.32% and 17.81% of the fund's value
respectively. America Movil is a wireless phone operator, while
Telefonos de Mexico, better known as TelMex, is Mexico's largest phone
company.
The fund's five largest component stocks are all listed as American
Depositary Receipts (ADRs) on the New York Stock Exchange. The others
are only available on the Pink Sheets, which means they are very
illiquid and may not trade for days on end in the United States.
Mexico is the United States' second-largest trading partner. It is
therefore acutely affected by any changes in the economic health of the
U.S. Although it is considered a developing country--and it remains
relatively poor--Mexico's business sector has become more open and
technologically advanced in recent years. The economy's growth has been
slower than in the U.S.; the nation's gross domestic product (GDP) is
expected to increase around 3.0% this year, as compared with 3.5-4.0%
for the U.S.
The Central Bank of Mexico tries to keep
the currency, the New Peso (MXN), from depreciating. Its value versus
the U.S. dollar (USD) has steadily eroded this year after a brief rally
in January. You can currently buy about 11.5 New Pesos for one U.S.
dollar. The last major currency depreciation took place in 1994.
Recall that all things being equal, a
weak U.S. dollar adds to returns of stocks held in a foreign currency.
Since MXN has generally fallen this year versus the dollar, this has
acted as a drag on the value of the iShares Mexico Fund.
Mexico's stock market can be very volatile. Liquidity is focused on the
largest stocks, which EWW holds. The political situation in the country,
although currently relatively stable, has been known to change quickly
in the past. This can result in large movements in this fund. This
has not been the case in recent years, but by their nature, such changes
are difficult to predict.
| MSCI
iShares Mexico Fund (EWW) |
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| Type: |
Foreign |
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| Similar funds: |
MSCI
iShares Brazil (EWZ) |
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| Options?: |
No |
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| Performance
Data |
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| 52-week High: |
$21.30 |
4/13/2004 |
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Annualized
return since: |
| 52-week Low: |
$14.58 |
8/6/2003 |
|
One-year |
28.32% |
| YTD Return: |
11.48% |
(as
of 7/30/2004) |
Three-year |
6.92% |
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Five-year |
7.97% |
| Dividends: |
$0.21 |
past 12-mos |
Life of fund* |
8.28% |
| Expense Ratio: |
0.59% |
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*
- Started trading 3/18/96 |
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| Correlation
Data* |
(1/02/02-7/30/04) |
Holdings* |
(as of
6/30/2004) |
| Dow
Jones Industrials |
58.6% |
|
America
Movil (AMX) |
21.32% |
| S&P 500 |
|
58.5% |
|
Telefonos
de Mexico (TMX) |
17.81% |
| Nasdaq
Composite |
57.3% |
|
Cemex (CX) |
9.33% |
| Nasdaq-100 |
|
53.8% |
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Grupo
Televisa (TV) |
5.02% |
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Fomento
Economico (FMX) |
4.63% |
| EWZ |
|
46.2% |
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Wal
Mart de Mexico (WMMVF) |
4.63% |
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Grupo
Carso (GPOVF) |
3.89% |
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Kimberly
Clark de Mexico (KCDMF) |
3.77% |
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Grupo
Modelo (GPMCF) |
3.42% |
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Carso
Global Telecom (CGTVF) |
2.64% |
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Percent
top ten are of total |
76.46% |
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*
Five letter ticker symbols trade on the Pink Sheets in the U.S. |
| Average
Daily Volume |
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Average
Daily Price Range |
| Jul-04 |
111,548 |
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Jul-04 |
1.8% |
| 2004 YTD |
238,523 |
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2004 YTD |
2.1% |
| 2003 |
148,905
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2003 |
1.9%
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| *
- Correlation measures how closely the two items track each other |
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*
Includes prior day's close (true range) |
HOW TO MAKE
MONEY IN EWW THIS YEAR
The longer-term outlook for this fund
is not very positive. The rally from the lows set in late 2001 (EWW
bottomed almost a year ahead of the U.S. stock market) was clearly
corrective. Weekly MACD is in a strong sell signal and is nowhere near
oversold. At a minimum, I expect this fund to fall towards $15 in the
coming months. Beyond that, a decline beneath the September 2001
low at $11.00 is entirely possible within the next 1-2 years.
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