Understand the economic Trends

Q&ACategory: QuestionsUnderstand the economic Trends
Tan Kok yee asked 7 years ago

Hi PC,
I am new here, I have go through your module 9, U mention how to select ETF the first step is understand the economic trend and identify the market.
Can u explain more about this?

  1. What you mean the economic trends?
  2. How can we find the information about economic treant
  3. What u mean identify market?


1 Answers
paul wong answered 7 years ago

Hi Kok Yee,
There are many ETFs that covers many type of investments; ie: Market Indices, Commodities, Bonds, Money Markets and Industry Sectors.
For market indices ETFs I will select countries with growth potential. Therefore it is important to understand how a particular country’s GDP is trending.
If I am interested in an oil based ETFs I will need to understand the trend for the global demand for oil.
You can almost all types of trends by visiting http://www.tradingeconomics.com
Identifying a market will define what type of ETF you can invest. For example adopting a top down approach:
India and China are growing at a much faster pace than the developed nations
So I study what are the fastest growing sectors in India or China’s economy
In India it is IT and Finance
In China it is healthcare and environment improvement
These are the markets.
So if you refer to my stock picks, I have selected ETFs which focus on Finance and IT in India, and in China I have a variety of stocks picks on healthcare, green energy, water treatment.
So when you have identified the market, you can then focus on the stock picks.   
Hope this clarifies.