The iShares MSCI Austria ETF (EWO) is an ETF that tracks the MSCI Austria IMI 25/50 Index, which in turn is designed to measure broad-based equity market performance in Austria. EWO has a long history of more than 25 years, but during that time it has only managed to amass an AUM of $68.34m, so clearly it isn't the most popular international equity counter around. Currently, EWO offers access to 27 Austrian stocks with an expense ratio of 0.51%which is more or less in line with other European alternatives. The yield on offer is 1.66%. See full list on seekingalpha.com Source: Statista Consumer confidence levels had been convalescing at a healthy pace this year and were on course to take out the record highs last seen in early 2018, but the recent spike in cases to levels last seen in 2020 and the heightened inflation riskmay have put the brakes on for the time being. Please note that there is still ample pent-up purchasing power amongst Austrian households that could be deployed next year; the gross household savings rate is closer to 25% and is still well above the historical norm. Source: Trading Economics In addition to that, Austrian authorities also plan to incorporate a new ' eco-social tax'whereby new taxes will be imposed on carbon emissions (a CO2 tax of EUR30 per tonne of carbon, rising to EUR55 per tonne by 2025) which in turn will be used to fund tax cuts for medium-income earners (in 2020, tax rates had already been lowered for the low-income earners). There are also plans to lower health insurance contributions and provide higher ch... See full list on seekingalpha.com EWO is heavily exposed to the financial sector which enjoys a weight of 32%, 2.2x times the next largest sector- energy at 14%. Structurally, I believe Austrian banks are fairly well placed to cope with any asset quality issues as Austrian households (household debt accounts for only 53% of GDP. Source- Fitch) and corporates are not overly overleveraged and have adequate repayment capacity. In fact, the overall NPL of Austrian banks has been on a declining trend for years from 3.5% in 2014, to 1.5% as of Q2-21. They are also well-capitalized. I touched upon the pent-up purchasing power waiting to be deployed and if the tax reform comes through that should also galvanize spending and investment plans which should aid loan growth EWO's top holding - with a solid weight of 17%- too is a financial stock- The Erste Group Bank (OTCPK:EBKOF), and I feel prospects here are particularly bright as the company is well-exposed, not only to the domestic economy, but also has strong exposure to t... See full list on seekingalpha.com When I look at the YCharts estimates and valuations of EWO, I have to admit that the ETF looks fairly attractive, particularly in light of the comparable figures for the other iShares European alternatives that have a similar nominal GDP range (between ~$300bn-$600bn) with Austria. i.e., Belgium, Denmark, Finland, Ireland, Norway, Sweden. As you can see from the table below, EWO trades at a forecasted weighted average P/E of only 11.2x (only EWK- the Belgian ETF is lower) which represents a ~29% discount to the average of all the other ETFs in the peer set including the Eurozone focused option- EZU. Source: Prepared by the writer using data from YCharts These valuations look even more enticing when you juxtapose it against the respective long-run forward earnings potential of the ETFs; as per YCharts, EWO's equities are expected to lead the peer set with a 5-year forward earnings profile of 21%, almost 700bps higher than the average of the peer set. Source: Prepared by the writer us... See full list on seekingalpha.com
Get Price