Gorden's Global Picks

08/06/2004 12:00 am EST


In a special report on international investment markets, Gordon Pape looks at the winners in the first half of 2004 and those he feels will continue to be among the strong performers in the second half. Here, the advisor offers his top global closed-end and ETF ideas.

"Believe it or not, Mexico’s Bolsa was the top-performing stock index among the world’s major markets. The Bolsa advanced by 16.9%, way ahead of anywhere else. Investors holding Latin American mutual funds have generally made small gains this year, but none comes close to the Mexico Fund. The best bet on this market is a closed-end fund that specializes in Mexican securities. The Mexico Fund (MXF NYSE) ended 2003 at US $16.45 and closed on June 30 at US $19.25 for a first half gain of 17%, almost exactly the same as the Bolsa. Another option is to buy the iShares Mexico (EWW ASE), which are designed to track the index. However, they are only up 13.8% this year so they have not kept pace with the Bolsa.

"We’ve been waiting for more than a decade for Japan to emerge from its long funk. Perhaps that time has finally come. The Nikkei gained 11.1% in the first half of the year. Over the past 12 months, it is up 27.8%. Individual Japanese stocks are relatively easy to acquire, as many trade as ADRs in New York. However, we would look at some closed-end funds, such as Japan Equity Fund (JEQ NYSE), which had a nice run-up in the early spring before slipping back. Japan Smaller Cap Fund (JOF NYSE) has fared better so far this year.

"The major European markets like Britain and France have been unimpressive so far this year. But look at little Belgium. Its index is up 10.1% in 2004. Also doing well is Italy, with a 6% advance. The iShares of several of these small markets have done well so far this year. The best of the bunch is iShares Austria (EWO ASE) which moved up an impressive 27.8% in the first six months of 2004. iShares Sweden (EWD ASE) came next with a 12.7% move. iShares Belgium (EWK ASE) gained 11.2% and iShares Italy (EWI ASE) added 6.6%, both slightly ahead of their respective indexes. In Australia, the Sydney All Ordinaries Index was up 6.8% in the first half, a very respectable showing. It is difficult to buy individual Australian stocks and there are no Australia mutual funds because of the small size of the market. But don’t despair if you think Australia is the place to put some of your money, investors can look at the  iShares Australia (EWA ASE)."

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