The third economy in the EFA I've investigated is The Netherlands:
The Netherlands Economy & Equity Investment
|
Name
|
The Netherlands (Part of the Kingdom of The Netherlands)
|
|
Population (2012)
|
16.79
million
|
|
Currency
|
Euro
(EUR)
|
|
2012 GDP
|
US
$709.5 billion
|
|
2012 GDP Growth
|
-0.5%
(real)
|
|
IMF GDP Growth Prediction for 2014
|
0.3% (-1.1% predicted for 2013)
|
|
Unemployment
|
8.7% (July
2013)
|
|
Inflation
|
3.2% (June
2013 YOY)
|
|
Budget Deficit/Surplus
|
Positive
€24.3 billion (2012)
|
|
Currency Rate
|
EUR/USD
1.38
|
|
IMF CPI Growth Prediction for 2014
|
2.9% (1.3% for 2013)
|
|
Main Sectors of Economy
|
Service
73.2%, Industry 24.1% (Exports of goods & services accounted for 78% of
GDP in 2012)
|
|
Main Exports
|
Machinery
& equipment, chemicals, fuel, foodstuffs
|
|
Main Export Partners
|
Germany 26.3%
Belgium 14.1%
France 8.8%
|
|
Main Imports
|
Machinery
& transport equipment, fuels, chemicals, foodstuffs
|
|
Main Import Partners
|
Germany 13.9%
China 12.0%
Belgium 8.4%
|
|
Main Stock Exchange
|
AEX
|
|
Market Cap
|
€594.7
billion (2011 CIA database)
|
|
Market Performance YTD
|
11.7%
|
Netherlands Exports
·
Although only 2% of the population is employed in
agriculture; The Netherlands are the second largest agricultural exporter in
the whole world, after the USA
·
The Nethelands’ economy is currently in
recession. In July consumer spending was down 2.2% from 12 months before, and
corporate investment down 9.4%. Unemployment has risen steadily since the
financial crisis
·
As the Netherlands relies heavily on foreign
trade, it’s GDP is also tied to the strength of the Euro, which it doesn’t have
much control over.
·
Inflation did decrease in September to 2.4%,
down from 2.8% in August, although Dutch inflation levels have been
substantially above the Eurozone average for some time.
·
The Netherlands does have some notably big
companies such as Royal Dutch Shell; the largest company in the world.
·
The 5 biggest Dutch public companies are: Royal Dutch Shell (RDSA:AEX) –Oil
exploration, production & refining; ING
Groep (INGA) – Financial; European
Aeronautic Defence and Space Company (EADS) – Everything it says in the
name; Lyondell Bassell Industries –
Chemicals; Aegon – Financials
·
The AEX
is operated by NYSE Euronext, created in the last decade by Dutch Exchange,
French Exchange, LIFFE & NYSE mergers and acquirements. It experienced drop
in 2008 along with other countries and has been more historically volatile than
the FTSE, partly because of its size & links to other indexes operated by
NYSE Euronext.
·
AEX has enjoyed a 16.69% increase in the year to date
ETFs
·
iShares
AEX UCITS ETF (IAEX) is a physical ETF that tracks the AEX as closely as
possible. It offers exposure to the 25 most traded stocks on the AEX
·
SPDR
AEX Index ETF also buys physical stocks on the AEX in a proportionate weighting
to their percentage of the index.
My Outlook on The Netherlands Investment
The Netherlands has been in recession since mid-2012 and has
been experiencing a steady increase in unemployment. Although the Netherlands
is very export orientated, its main export partners are in the Eurozone, so a
strengthening Euro would be beneficial by increasing the purchasing power of
the Netherlands and decreasing the cost of imports in real terms. Continuing
cuts in government spending and the deleveraging of households will continue to
dampen growth & with the currently stronger Euro against the Dollar curbing
foreign investment, The Netherlands economy is in danger of stagnating. In
regards to an AEX tracking ETF, I would be very slightly bullish as Europe
gradually recovers, but I don’t think growth would outpace inflation by very
much in the next year.
No comments:
Post a Comment