This Germany ETF Could be a Buy-Low Opportunity

A political crisis has engulfed the German nation and threatens to add more intrigue to ongoing strife within the European Union. The 2017 German election saw the far-right party Alternative for Germany claim 94 seats in the Bundestag and become the third-largest party in the country. The results of the election shocked the establishment, and reigning Chancellor Angela Merkel moved to build a coalition.

Talks have broken down between Merkel’s Christian Democratic Union (CDU), and the Green Party and Free Democratic Party (FDP) to form a coalition. Merkel has said that she would prefer to hold yet another election rather than proceed with a minority government. The European Union, which is currently in the midst of negotiations with Britain regarding the Brexit “divorce settlement”, has benefited from the stability of its strongest economy; Germany.

In spite of the political strife, investors should not turn away from what continues to be an incredibly strong German economy. The iShares MSCI Germany ETF (NYSE:EWG) gives investors the opportunity to track the German market. Some of its top holdings include SAP SE, Bayer SE, and Siemens AG.

The ETF was down 0.97% in early afternoon trading on November 22nd. However, it has climbed 23.6% in 2017 and 30% year over year. The German unemployment rate was 5.6% in October, the lowest rate since reunification. Business confidence is high and it reported GDP growth of 0.8% in October, which beat estimates.

The German central bank expects growth to continue at its strong pace in the fourth quarter. This could be a great opportunity for investors to buy low on Europe’s strongest economy.