Going Foreign this Morning

Quite a few foreign markets have pulled back on order of nearly 10% of late, so I am going to take this morning as an opportunity to re-expand my positions in some of these country ETFs as well as start two new countries. While a 'global slowdown' is a risk, and might hurt valuations, I still think global markets will be stronger than US markets in terms of return for the next few years - however they are of course more volatile. Hence I take a basket approach.

First, are the positions I already had in the fund, but had cut back of late, and am now buying on some pullbacks

1. iShares Hong Kong (EWH) - this ETF has recently spiked up to low $24s. Hong Kong has been on fire, more than doubling since the possibility of mainland investors being able to invest in Hong Kong was put on the table. I wrote about this Aug 23 (The case for Hong Kong and iShares Hong Kong), and revisited the story in early October (Revisiting Hong Kong and iShares Hong Kong) In the month since the October story the Hang Sang has gone on to tack on nearly another 20% before pulling back the last week. The ETF was down >5% this morning and down >10% in the past 3 sessions. Word is China is "reviewing" this proposal again (i.e. dragging feet) and this has caused consternation about when this flood of money will be hitting HK from the mainland. Needless to say Hong Kong is an attractive way to play China with or without the mainland money but obviously much of the recent run in the Hang Sang was due to speculation this would happen sooner rather than later. That said, I am taking this 10%+ opportunity in the past few sessions to begin building back the position I had cut very severly. (EWH was down to 0.2% of the portfolio as I took profits on this massive run). I bought 400 shares in the mid $21s range ($8.7K) to add to the 100 I had left over to take this position up to 0.9% of the portfolio.
2. iShares Malaysia (EWM) - Malaysia is almost like buying an oil stock - they are a very large exporter of crude and in the general geographic sphere of India/China so a major advantage; and the ETF has reflected this. I actually cut this position just last week (400 shares near $13), as the ETF spiked, and am taking the opportunity get those 400 shares back; however I missed the lows of the day near $12.30. So this position was rebought in the mid $12s, for about 5% less than sold last week. Wish I had caught the bottom or this would of been an even better exchange. This buy takes iShares Malaysia back to a 1.1% position.
3. iShares Singapore (EWS) - Singapore is a financial hub of southeast Asia, and it appears (although there are fears) they did not buy much of this subprime junk that the Europeans seemed to fall in love with. This index peaked @ $15.75 just 3 sessions ago and dropped as low as $14.65 today or a drop of 7%. While I did not catch that low, I took the opportunity add to my existing position of 500 shares by an additional 600 shares and increase this position to 1.4% of the fund.

Second, two new positions to the fund

1. iShares Australia (EWA) - Australia is again, a portal into China. I am trying to get exposure to China without overexposing to some of the mania of China itself. And people forget India but Australia is a mature, commodity rich Western nation that can serve the growth of the entire region. I have been waiting to pull the trigger on this ETF for a while, and with a pullback from nearly $35 to $33 (just under 6%) in just a handful of sessions I am beginning a smallish position of 350 shares here. This is about $11.5K or roughly 1% of the fund.
2. iShares Brazil (EWZ) - this ETF is very concentrated and top heavy with just a few names. I have been debating adding some mining/metals exposure in the fund so in one fell swoop I can add a stake in CVRD (RIO) which dominates the holdings of this ETF, along with Petrobras (PBR) the oil company, and get some other exposure to South America's jewel. Again, this is not a new name and Brazil has had a tremendous run over the past few years. With a pullback from near $87 to $81.5 we've had yet another case of a 6% correction so I initiated a stake here of just 100 shares ($8.1K) or 0.7% of the fund.

So all together this batch of foreign index buying was about $42,000 or 3.5% increase in exposure. While the markets tend to trade together as shown by their nearly unanimous fall the past 3-4 sessions in lock step, I am still taking a basket approach to the group. I am not overdoing the buying since (a) I am light on cash and (b) despite their pullbacks they still have had massive runs. I'd like to see even lower prices to add more - but I was able to get these 6-9% lower than where they were trading middle of last week.

Long all 5 iShares in fund; no personal positions