THE BRAZIL FUND (BZF)
The Brazil Fund, a closed-end fund traded on the New York Stock Exchange (NYSE), has been in existence since April 1988. The fund includes holdings in such Brazilian companies as Weg Industries, (industrial goods and services), Banco Itau Holding Financeira (banks), and Petroleo Brasileiro (oil, gas, petrochemicals).
After a strong 2003, during which BZF traded above its 10-week moving average for the later three quarters of the year, the fund slipped into a correction that took about 30% off its late 2003 price. That correction lasted six months into the late spring of 2004, when BZF reversed and began moving aggressively higher. Moving above its 20- and 50-week moving averages in the summer of 2004, BZF nearly doubled in value from those late spring/early summer lows as 2004 drew to an end.
What they say: "One problem is that the obvious source of new investment is old investors-and they have their doubts. Duke Energy, an American company, has invested 1.5 billion reals ($545m) in Brazil since buying Cesp Paranapanema, a generator on the edge of Sao Paulo state, in 1999. It has been hurt by currency devaluation, by a plunge in demand when rationing was imposed and by quirky regulatory decisions. ‘We have no plans to invest new capital in Brazil,' said the company's ‘southern cone' chief, Mickey Peters, in August. Duke is keeping quiet before the auction." -From "No Switch-off, Please: Will A Giant Energy Auction In Brazil Lift Investors' Spirits?" Economist, December 2, 2004.
THE FIRST ISRAEL FUND (ISL)
The First Israel Fund, a closed-end fund traded on the NYSE, has been in existence since October 1992. The fund includes holdings in such Israeli companies as Teva Pharmaceutical Industries Ltd. (pharmaceuticals), Azis Industries Ltd. (chemical manufacturing), and Hasel Insurance Investments (banking and financial services).
Like most financial assets in 2003, Isl enjoyed advances throughout that year. The next year, however, brought troubles as the fund began moving sideways, closing beneath its 20-week moving average in the second quarter and below its 50-week moving average - albeit briefly - in the third quarter. Along with the US market, Isl bottomed in August 2004 and has been in a strong uptrend in the weeks and months since.
What they say: "It should be clear that both El Al and Discount are problematic assets which the government has no reason to hold onto and will hopefully be much better managed by private ownership. Let us be under no illusion. Nobody was queuing to buy the least efficient bank in the local banking sector and the state was better off selling it than canceling the whole tender and putting it up for sale some time in the unforeseeable future, or distribute the bank's shares to the public the way the government intends to do with Bank Leumi." -From "Commentary: A Discounted Discount Bank?" Dan Gerstenfeld, The Jerusalem Post, January 27, 2005.
THE CHILE FUND (CH)
The Chile Fund, a closed-end fund traded on the NYSE, has been in existence since September 1989. With total net assets in excess of $140 million, the fund includes holdings in Empresas Copec, (diversified operations), Empresa National de Electricidad (electric integrated), and Compania de Telecommunicaciones de Chile (telecommunications).
This fund more than doubled from its first-quarter 2003 lows to the end of the year. Since that time, however, the fortunes of CH have been less stellar insofar as the rally that began in many equities and funds in mid- to late 2004 has yet to provide CH with enduring new highs in the bull market that began in October 2002. In fact, the lack of followthrough on the CH's most recent late 2004 peak is a somewhat ominous sign for those looking to go long Chile - or at least, its biggest and best companies.
What they say: "Sino-Chilean relations entered in a new phase on Thursday, with the two countries announcing the launch of negotiations to establish a free trade agreement. Visiting Chinese President Hu Jintao and his Chilean counterpart Ricardo Lagos Escobar formally proclaimed the start of the talks on a free trade pact after their meeting on Thursday ... In particular, Lagos said his country had made a deal with China regarding copper trade. Chile is the world-leading exporter of the metal, and China is the largest copper importer, Lagos said." -From "China, Chile Launch Free Trade Talks," Zhao Huanxin, China Daily, November 19, 2004.
THE NEW IRELAND FUND (IRL)
The New Ireland Fund, a closed-end fund traded on the NYSE, has been in existence since March 1990. The fund includes holdings such as Allied Irish Banks, PLC (banks), Kerry Group PLC, Series A (food and beverage), and Crh PLC (construction and building materials).
After a stellar 2003, when Irl nearly doubled in value, it hit a snag as it entered 2004. Late in the first quarter of that year and into the second, Irl closed frequently below the 20-week moving average. But, it is important to note, Irl never did close beneath its 50-week moving average during that period. In fact, it appears as if support at the 50-week moving average in late spring proved pivotal in sending shares of Irl higher in the last quarter of 2004, with the fund gaining nearly 50% from its spring 2004 lows to present.
What they say: "Ireland's story is unique: a small, English-speaking, non-industrialised country on the edge of Europe was able to secure structural funds from the EU, cut taxes, deregulate faster than its neighbours and attract lots of foreign companies in the process. Well done, Ireland-but this is not the way forward for low-growth Europe." -From "Ireland's record does not make it a model," Wolfgang Munchau, Financial Times, January 31, 2005.
Excerpted from an article originally published in the August 2005 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2005, Technical Analysis, Inc.
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