Singapore: Another Asian Tiger? (EWS)

When it comes to making investment bets on the Pacific Rim, China and India get most of the attention. That’s understandable – they are the two largest countries in the world by population. Economic growth has been rapid in both places. The day will come when China and India have larger economies than the U.S.

This makes it easy to overlook other opportunities in the region. Investors looking for China-related opportunities can find some in smaller economies. Other Asian economies are experiencing exponential economic growth due to tailwinds from the China boom. Last week we told you about Thailand, but there are other areas to consider.

One example is Singapore, via iShares MSCI Singapore (EWS). EWS is the marquee Singapore-specific ETF available to U.S. investors. Performance has been robust in the past year, way ahead of iShares FTSE/Xinhua China 25 Index (FXI). In the last year FXI gained 38% while EWS rose 81%.

According to MarketWatch, China recently said its first quarter GDP soared 11.9%. That torrid growth has the potential to trickle down to other countries in the region, including Singapore. On a seasonally-adjusted basis, Singapore said its GDP surged by an astounding 32.1% in the first quarter as manufacturing activity in the country doubled. Exports rose by 25%. That’s the largest growth rate Singapore has seen since 1975.

As a result, Singapore now expects its GDP to grow by 9% this year, up from a previous estimate of 7% growth. The downside to such rapid economic expansion is that inflation can become an issue, but Singapore is tempering this by allowing its currency to appreciate. There hasn’t been much in the way of near-term impact to EWS; the ETF is still up 5% in the past month.

A deeper look at EWS shows the 30-stock portfolio is nicely indicative of Singapore’s broader economy. Financials account for about half of the ETF by weight. Industrial and telecommunication names combine to account for another 36%. Singapore Telecommunications is the largest single equity holding at 12%.

While some country-specific ETFs don’t have a strong asset base and anemic daily trading volume, EWS is not one of those. It has over $1.5 billion in assets and trades about 3.1 million shares a day. EWS has an expense ratio of 0.55%.

At the end of the day, China and India will remain the big kahunas of the Pacific Rim. But there are other opportunities in the region for investors. If anything, China’s dominance portends good things its neighbors. That means investors should warm up to the little Asian tiger on the tip of Malaysia. To buy the rising tide of Pacific stocks, go with Singapore and EWS.

Disclosure covering writer, editor, publisher, and affiliates: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.