iShares MSCI Singapore ETFNYSE American: EWS

International investing with single country ETFs like iShares MSCI Singapore ETF is favored at this point of the cycle. Singapore offers business-friendly tax policies and government incentives for infrastructure, skills training, and technological innovation. EWS provides targeted exposure to the Singaporean equity market with high concentration in the Financial sector, offering unique diversification and dividend yield.

Whitby, Ontario--(Newsfile Corp. - May 30, 2024) - Environmental Waste International (TSXV: EWS) (the "Company" or "EWS) announced today that it had raised $660,000 via a non-brokered private placement offering (the "Offering") of 33,000,000 common shares at $0.02 per common share. There were no fees paid for the Offering.

The iShares MSCI Singapore ETF follows the MSCI Singapore Index, which emphasizes mid and large-cap stocks and has $439M in assets. It boasts a significant yield of 6.4% TTM. EWS is heavily invested in the financial sector, which makes up around 50% of its holdings and benefits from high interest rates. However, fluctuations in interest rates could affect its profitability. Despite appealing valuation metrics and a solid track record of dividends, recent outflows and economic challenges in Singapore may impact its future performance.

Singapore remains a shining example of resilience in Southeast Asia, but the growth in earnings is not very impressive. Given the current valuations, Singapore equities do not seem to provide attractive value.

EWS ETF: Not The Most Exciting Option Around

From an income perspective, you'd be hard-pressed to look beyond the well-covered 5% yield offered by iShares' MSCI Singapore ETF. Yet, capital growth, including dividends, continues to be lackluster amid macro and industry-wide headwinds. Barring a much deeper valuation discount, owning a fund as bank-heavy as EWS into a monetary easing cycle doesn't seem all that appealing.

Singapore's economic growth in 2023 has slowed compared to 2022, with contracting manufacturing output and exports being a key factor. The service sector is expected to be more resilient, driven by the recovery of international tourism travel in the APAC region.

Helped by its bank concentration, the iShares MSCI Singapore ETF is on track to become the highest-yielding ETF in Southeast Asia. Owning a bank-heavy fund into a peaking monetary tightening phase and an eventual easing cycle next year doesn't seem particularly appealing. With the fund also priced at a premium to its forward growth outlook, I would be hesitant about chasing the yield here.

The Strait Time Index (STI) index has underperformed its global peers as concerns about Singapore slowdown continues. The index, which tracks the biggest companies in Singapore, was trading at S$3,245 on Friday, a few points above this month's low of S$3,130.