Real Money

Dion's Weekly ETF Blog Wrap

Find out what Don Dion was blogging about this past week on RealMoney. 

NEW YORK ( TheStreet) -- Don Dion posts his current insights on the stock, bond, commodity and currency markets in his RealMoney blog, anticipating which ETFs will be in play next. 

Here are three of his blogs from the past week. 

Tap the Potential of Southeast Asia

Published 8/18/2010 7:45 AM EDT

Starting today, Vietnam's central bank will be devaluing the country's currency, the dong, by 2.1% against the dollar.  These measures -- the announcement of which came yesterday -- are being taken in order to reduce the country's trade deficit, which was twice as large in the first seven months of this year vs. the same period in 2009. 

This is not the first recent occasion in which the Vietnamese government has decided to devalue the currency, and it seems unlikely the adjustment will have any lasting positive effect on Market Vectors Vietnam ETF ( VNM).  Sudden currency shifts generally cause market uncertainty.  Furthermore, the last time the dong was devalued in February, VNM rose 0.5% for the month, but the period was a volatile one. 

Many are hoping that Vietnam can replicate China's export-led growth spurt, but right now I don't like the prospects for VNM.  Especially given the ETF's 5% loss so far this year, there are much better ETF plays for Southeast Asia at the moment.  Markets in Malaysia, for instance, are near two-and-a-half-year highs on earnings optimism, which has helped iShares MSCI Malaysia ( EWM) to breach its highs for the year in August and to continue to march higher. 

Year to date, the best-performing Southeast Asia ETF is Market Vectors Indonesia ETF ( IDX), though it has languished and begun to trend downward.  Meanwhile, the second-best year-to-date performer -- iShares Thailand Investable Market Index ( THD) -- is moving steadily higher.  Markets in Thailand are currently continuing a growth spurt that had been temporarily interrupted earlier this year by demonstrations in capital city Bangkok. 

Thus, for aggressive investors seeking a fund capable of harnessing the powerful growth in the Southeast Asia region, I would go with THD or EWM rather than VNM.  For less aggressive investors, I also likeiShares MSCI Singapore ( EWS). 

At the time of publication, Dion Money Management had no positions in the stocks mentioned.