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Switzerland ETFs
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About Switzerland ETFs |
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Switzerland ETFs Overview and forecast
The Swiss ETFs are a study in trading patterns. iShares MSCI Switzerland Index Fund AMEX:EWL) has a graphic tale of sudden high volume trading, quite unlike its long and comparatively mild history before 2006. The peak of the boom market saw volumes in multiples of its previous norms. EWL didn't go quite as high as others, but at the top of the market it was producing 100% ROI. At the bottom of the post crash era, it was a negative return.
This ETF went into brief hibernation for a while, and unlike just about every other ETF on the planet, was going up in early March 2009. Volumes revived in February, and the trading intensity picked up again. The upside was noticeably flatter than in other markets, but the Swiss market picked up sooner. Also noticeable is that EWL's volumes returned to their pre boom, relatively modest levels.
There are some indications of institutional buying, but this ETF is much more of an investment market product than a traditional trader. A look at the Rate Of Change (ROI) shows much less choppy waters than in other ETF markets. EWL is a virtual textbook ETF stock index model, and in the case of the Swiss stocks, it has some major league stocks to work with. Ishares has even weighted the holdings with three major stocks, not its usual two.
Short term (6 months)
This is a different market, and the Swiss ETFs look much more like they're working on investment, rather than trading values. The market does produce some good margins for traders, but they tend to be flatter in the current environment. The Swiss market doesn't seem to be too keen on big spikes if it can avoid them, so any short term upside has to be considered limited.
The other side of the coin is that the market does regularly produce longer term price gains. The six month time frame usually covers these moves. That's not the sort of speed most traders want to see, but in terms of returns on spreads, it's respectable.
Medium term (2 years)
One of the best descriptions of the Swiss market is that it's a model of understatement, compared to many others. This is very much a professional investment market in a country full of professional investors. That does explain the dynamics, and the obviously selective volume ranges outside the boom years. The medium term is a somewhat better range for assessment than the short term, but it's still complex.
The Swiss market is a contrasting mix of moves, and frequently gives the wrong impression in false starts and rises that slow down or drop after a month or so. It can be highly deceptive, and its most reliable behavior mode is a slow but steady rise over a two year period. It's not dramatic, either, and these moves take a while to become obvious. The current medium term is looking relatively positive, but don't hold your breath.
Long term (5 years)
For a high capital market, Switzerland isn't necessarily much different in the five year period, compared to the two year period. The obvious investment market mode seems to put a brake on sudden surges. That could be a plus for investors, because that environment tends to relate to real values over time. Corrections tend to find mid points, rather than spikes.
The second quarter of 2009 saw a resurgence that would have surprised nobody, given the Swiss index, and the strength of holdings like EWL's. That's an actual correction back to realistic values, not the trading surge effect. The overall price moves look a lot more like conventional valuation ratios, not trading driven in any longer term sense.
Qualifiers to projections
The entry of the relatively new Deutsche Bank ETFs onto the Swiss market is a sign that this market is adapting to the post crash trading environment very quickly, and doing it well. These ETFs are part of the big stable the bank has developed, and trade is brisk. The Swiss market is the obvious place for ETFs like these, and it's likely that the capital investment market will react by expanding the market to compete.
Switzerland could perhaps be the best possible place on Earth to see how the new ETF models operate. Being one of the world's most developed capital markets, the Swiss are likely to explore the various options thoroughly. Switzerland is a highly competitive investment environment, and survival of the fittest in this market is likely to produce some real innovations.
It'll definitely challenge the standard index investment models. Whether a big capital market like Switzerland responds to a particular investment model or ignores it could be a virtual breeding chamber of hybridized ETFs. It sure won't get dull.
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Last Updated on: 2010-01-14 02:03:40 |
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