INTERMARKET REVIEW
Brazil Fund (BZF)
The Brazil Fund is a closed-end fund traded on the New York Stock Exchange. The fund is advised by Deutsche Investment Management (Americas) Inc., and has been in existence since April 1988. With total net assets in excess of $220 million, the Brazil Fund includes holdings in such Brazilian companies as Companhia de Bebidas das Americas (breweries and distilleries), Banco Itau Holding Financeira SA (banks), and Petróleo Brasileiro SA (oil, gas, petrochemicals).
The Brazil Fund bottomed in October 2002 along with most equities and equities-based funds worldwide after falling below its 20- and 50-week moving averages in the spring of 2002. The Brazil Fund rebounded strongly in the spring of 2003, after a correction that tested - and briefly broke down below - the shorter-20-week moving average in February.
What they say: "Real interest rates in Brazil remain among the highest in the world. But the benefit from the cut might be large. It should subdue, though it will not silence, critics such as Mr. Alencar. More important, it should help protect Lula from radicals who want to dump austerity and gut reform in favor of exchange and price controls." -"Lula 'twixt inflation and recession," The Economist: June 21, 2003.
First Israel Fund (ISL)
The First Israel Fund is a closed-end fund traded on the New York Stock Exchange. The fund is advised by Credit Suisse Asset Management, and has been in existence since October 1992. With total net assets in excess of $40 million, the First Israel Fund includes holdings in such Israeli companies as Teva Pharmaceutical Industries, Ltd. (pharmaceuticals), Bezeg Israeli Telecommunications (telecom), and Hasel Insurance Investments (banking and financial services).
Slipping beneath its 20- and 50-week moving averages early in 2002, the First Israel Fund successfully tested an October 2002 bottom in February 2003. Moving up strongly in March of that year, the Fund gained more than 50% from its lows in the first few months of 2003 to its highs in the summer.
What they say: "Does this mean that the interest rate should not be lowered? Of course not. But it should be lowered as a means of influencing domestic demand and activity, not the exchange rate. The Bank of Israel will decide to lower it, based on other factors, such as the budget deficit and the rate of inflation. Indeed, in this week's speech, the governor reiterated his intention of continuing to lower interest, if the government succeeds in controlling its deficit and if inflation remains low." -Yaacov Fisher, "It's Those Foreigners!" Jerusalem Post: July 10, 2003.
The New Ireland Fund (IRL)
The New Ireland Fund is a closed-end fund traded on the New York Stock Exchange. The fund is advised by Bank of Ireland Asset Management Ltd., and has been in existence since March 1990. With total net assets in excess of $50 million, the New Ireland Fund includes holdings Allied Irish Banks, PLC (banks), Kerry Group PLC, Series A (food and beverage), and CRH PLC (construction and building materials).
The New Ireland Fund, by the summer of 2003, was trading higher than it has at any point since before the fall of 2001. After correcting sharply in the summer of 2002 -- including a collapse beneath its 20- and 50-week moving averages -- the fund consolidated during late 2002 and early 2003 before breaking out above the 20- and 50-week moving averages in the early summer of 2003.
What they say: "With its 12.5% corporate tax regime and pro-business industrial policy, Ireland has succeeded in attracting foreign investment, with 1,000 companies in the IT sector there and divisions of nine of the top 10 pharmaceutical groups and 13 of the top 20 medical devices companies." --John Murray Brown, "Ireland launches high-risk drive to lure top research scientists," Financial Times: July 11, 2003.
Southern Africa Fund (SOA)
The Southern Africa Fund is a closed-end fund traded on the New York Stock Exchange. The fund is advised by Investec Asset Management, and has been in existence since March 1994. With total net assets in excess of $50 million, the Southern Africa fund includes holdings in Anglo American Plc (basic industry and mining), Absa Group Limited (financial services), and Sasol Ltd. (chemical manufacturing).
The Southern Africa Fund is trading higher than it has in years. Surpassing the late spring/early summer highs of 2002 during its summer 2003 rally, the fund is now poised to challenge the highs from the late spring/early summer of 2001. Breaking out above its 20- and 50-week moving averages in the fall of 2002 during the global rally in equities, the Southern Africa Fund has reached the midsummer of 2003 quite extended above its shorter long-term moving averages.
What they say: "The nature of the investments that need to be made are rather straightforwardÉ Any serious calculation shows this can be done for less than 1% of Gnp for the rich world. The basic economic reality is very different from 25 years ago. We can invest to eliminate poverty, and we are the first generation to say that." -Jeffrey Sachs, head of the Earth Institute at Columbia University, as quoted by Mark Turner in "African nations Ôoff track' in reducing poverty," Financial Times: July 9, 2003.
Originally published in the December 2003 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2003, Technical Analysis, Inc.
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