Yellow Lights Inch Closer To Green For EWD

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omersukrugoksu Despite the Nordic reputation for stability and social cohesion (which tend to be associated with a positive investment environment), the region is not immune to the pressures bearing ...

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href=https://seekingalpha.com/article/4677866-yellow-lights-inch-closer-to-green-for-ewd><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>omersukrugoksu Despite the Nordic reputation for stability and social cohesion (which tend to be associated with a positive investment environment), the region is not immune to the pressures bearing ...</p>\n\n<a href=\"https://seekingalpha.com/article/4677866-yellow-lights-inch-closer-to-green-for-ewd\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"IVSXF","symbol_name":"Investors 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ACC","LU0061475181.USD":"THREADNEEDLE (LUX) AMERICAN \"AU\" (USD) ACC","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","MSFT":"微软","LU0708995401.HKD":"FRANKLIN U.S. OPPORTUNITIES \"A\" (HKD) ACC"},"translate_title":"EWD的黄灯离绿灯越来越近","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ATLKY":1,"URTH":1,"NVDA":1,"MSFT":1,"IVSXF":1,"IEUR":1,"EWD":1,"AMZN":1,"AZN":1},"content_text":"omersukrugoksu Despite the Nordic reputation for stability and social cohesion (which tend to be associated with a positive investment environment), the region is not immune to the pressures bearing down on the rest of Northern Europe at the moment. Persistent inflation has been exacerbated by the energy crisis wrought by the Russia/Ukraine war, particularly in Sweden, which does not have its own domestic energy supply to draw upon to help mitigate climbing electricity prices. These problems have been percolating since 2022, though the iShares MSCI Sweden ETF (NYSEARCA:EWD) hasn't blinked on a trailing 1-year basis. Today I'll look at some features animating the fund, providing some context as to why EWD is entitled to a certain amount of optimism, though not enough for us to rate it a buy. Inflation And Real Estate Doldrums Offset By NATO News Bleak economic data and its enduring repercussions have been the headline story for much of Europe recently. Sweden is no exception, so much so that the increasing frequency of gang-related violence compelled central bank governor Erik Thedéen to speak about how the unrest could have genuinely negative consequences for the already struggling economic environment. Though the OECD projects GDP growth in 2024, inflation remains high, and the króna remains weak. Despite the drawbacks described above, there are bright spots to consider when thinking about Sweden. The country has what has been described as a \"two-track economy.\" The business sector and labour market have prevailed, while Consumer spending and housing prices suffered as a result of the central bank's increased interest rates in 2023. The precarity of the housing market has drawn some much-deserved hand wringing, as housing prices began to plummet in 2022 and mortgage costs approached 18% of monthly income for new borrowers in 2023. Swedish banks are highly exposed to the real estate market, having lent $360 billion to homeowners. The Economist However, in both January and February 2024, Sweden saw an increase in home prices after an extended period of free fall. Another bright spot is Sweden's recent joining of NATO, converting the Baltic Sea to the \"NATO Lake,\" meaning that all bordering countries of the Baltic Sea (save for Russia) are now NATO members. I won't pretend to read the tea leaves around an immensely complicated global conflict, and what Sweden's NATO status might portend. It does seem probable that securing this key strategic body of water will minimally encourage cooperation among the Nordic economic powerhouses, which will likely have ancillary benefits to Sweden in both the near and medium term. EWD Full Of Resilient Component Parts EWD tracks the MSCI Sweden IMI 25/50 Index. The fund has been able to gain traction, with ~$262M in assets with an expense ratio of 0.54%. EWD holds a total of 51 individual holdings. About 50% of the fund's holdings are allocated to the Industrials sector, while 25% is in Financials. This makes the fund fairly concentrated from a sector perspective. Other sizable allocations are to both Tech and Consumer Cyclicals. Seeking Alpha The top 10 holdings for the fund total 54.59%. Single stock allocation is less concentrated relative to the sector breakdown, with the most heavily weighted security in the firm belonging to Atlas Copco AB (OTCPK:ATLKY) which occupies 8.53% of the fund. Atlas is a Swedish multinational industrial company that develops, manufactures, and services industrial tools such as air compressors vacuum technologies, and power technologies. The second-largest allocation is to the Financials company Investor AB (OTCPK:IVSXF). Investor operates as both an investment manager, as well as a holding company for some large names, including the biopharmaceutical titan AstraZeneca (AZN), which came into the public's consciousness when it became one of the leading providers of the COVID-19 vaccine. Atlas has been off to a good start in 2024, returning +3.14% YTD. The company has seen growth in some of its industrial segments (air compressors) and has seen an increase in demand for its capacity to service these technologies. Investor AB has also looked promising in Q12024, which has returned +7.61% YTD. Seeking Alpha EWD Besting The Rest Of Europe... For The Most Part EWD has returned +24.27% on a trailing-year basis, significantly outperforming the broader European market (IEUR) which returned +17.71% in the same period. Both these funds underperformed global stocks; the iShares MSCI World (URTH) returned +30.03% on a trailing 1-year basis. However, given that URTH is largely overweight US stocks, with large allocations to some banner mega-caps including Microsoft (MSFT), Apple, (AAPL), NVIDIA (NVDA), and Amazon (AMZN), EWD's underperformance remains impressive. Data by YCharts Performance has been less impressive in the YTD period, returning +2.96% compared with IEUR's +4.0% gains and URTH delivering +6.81%. Data by YCharts Something interesting to note is that EWD has outperformed European stocks pretty consistently when extending the look-back periods to both 5 and 10 years. The one period where EWD fails to outperform IEUR on a return basis is the last 3 years. Given EWD's heavy allocation to industrials and financials, which tend to be more cyclical, and less defensive, its outperformance over the 10 and 5-year look-back windows is reassuring. Data by YChartsData by YChartsData by YCharts When looking at 30-day rolling volatility, we see that the fund does carry more risk relative to the broader European market and global stocks. However, given how concentrated EWD is, this is in line with my expectations. Price swings of any given stock in this fund will have an outsized impact. Data by YCharts Conclusion  Sweden's present ambiguous economic reality mirrors some of what we're seeing in other parts of Europe. The bifurcation of its two-track economy has allowed for parts of the equity market to remain buoyed, while there is a genuine reason for concern. Is EWD's more modest recent performance a sign that the market has internalized the macro reality, and corrected course? Is the market overly optimistic about its ability to shore itself up against a looming real estate crisis? While the reversal in home prices is encouraging, they are not incrementally large enough to assuage my fears about the country's ability to stabilize itself if the shock defaults were to be realized. While I hope to revisit this topic very soon, I currently rate EWD as a HOLD.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2419504377"}