Foreign Closed-ends: Three Buys, One Hold

Turmoil in financial markets and slowing economies have hurt stock markets worldwide. But when government measures to counter the credit crisis begin to take effect, and when economic growth resumes, top-quality foreign stocks should rebound.

Here are four closed-end funds trading on the New York Exchange at discounts to their net asset value. Three are buys, and one is a hold.

SWISS HELVETIA FUND $11.39 (New York symbol SWZ; Shares outstanding: 33.2 million; Market cap: $378.6 million; CWA Rating: Conservative) invests mainly in large-capitalization Swiss stocks. The fund’s manager is Hottinger Group, which, as Banque Hottinger, dates back to 1786.

The Swiss government has moved quickly to restore confidence in its banking system. This includes taking a 9% interest in banking giant UBS AG. Renewed global growth will help the export oriented Swiss economy.

The $594.4 million fund’s top holdings are Nestle SA (food & beverages), 17.0%; Roche Holdings (pharmaceuticals) at 12.2%; Novartis AG (health care and pharmaceuticals), 9.2%; Zurich Financial Services (insurance), 5.4%; Syngenta AG (agribusiness), 4.9%; Basilea Pharmaceutica AG (Swiss biopharma), 3.8%; Atel Holding AG (Swiss energy), 3.5%; UBS AG (banking), 2.6%; Addex Pharmaceuticals, 2.6%; and BKW FMB Energie AG (Swiss power), 2.1%.

The main industry exposure of the fund’s stocks is as follows: Pharmaceuticals, 18.3%; Food & beverages, 17.0%; Utility suppliers, 10.5%; Chemicals, 9.6%; Industrial goods & services, 8.9%; Biotech, 7.2%; Banks, 6.3%; and Technology, 4.2%.

Swiss Helvetia Fund sells for a 17% discount from the current value of its assets. Buy.

SINGAPORE FUND $8.19 (New York symbol SGF; Shares outstanding: 9.4 million; Market cap: $76.7 million; CWA Rating: Aggressive) is fully invested in Singapore stocks. The manager is the Development Bank of Singapore.

Singapore’s economy is dependent on exports to major markets such as the U.S., China and Japan. It should prosper anew when these market recover.

The Singapore Fund’s top holdings are: United Overseas Bank, 11.8%; Overseas-Chinese Banking 9.6%; Singapore Telecom, 9.3%; Keppel Corp. (varied industries), 5.4%; Capitaland (property), 4.4%; Hongkong Land Holdings, 4.1%; SMRT Corp. (Singapore public transit), 3.8%; Sembcorp Marine (shipbuilding), 3.8%: Singapore Petroleum, 3.0%; and Ascendas REIT (commercial real estate), 3.0%.

The industry exposure of the stocks in the fund is as follows: Banks, 22.5%; Shipyards, 11.0%; Property development, 10.0%; Telecommunications 9.5%; Transportation-Marine, 6.5%; Real estate investment trusts, 6.2%; Transportation-Land, 3.8%; Oil & gas extraction, 2.9%: Food, beverage & tobacco, 2.8%; and Electrical products & computers, 2.2%.

The Singapore Fund sells for 3% less than the value of its assets. Buy.

INDIA FUND $19.58 (New York symbol IFN; Shares outstanding: 42.5 million; Market cap: $832.5 million; CWA Rating: Aggressive) invests mainly in large-capitalization Indian stocks. The manager of the fund is the Blackstone Group.

India’s growth has exceeded 9% annually over the last few years. The global slowdown and credit problems will hurt the Indian economy, but growth could still be as high as 7% in 2009.

India Fund’s top holdings are: Reliance Industries (conglomerate) at 13.1%; Bharti AirTel (telecom), 7.1%; Infosys Technologies (software), 6.9%; Housing Development Finance (finance), 4.5%; Oil & Natural Gas Corp., 4.0%; Hindustan Unilever (consumer products), 3.4%; State Bank of India, 2.9%; and Reliance Communications (telecom), 2.6%.

The main industry exposure of the stocks in the fund’s $2.1 billion portfolio is as follows: Finance, 18.8%; Petroleum related, 18.7%; Telecommunications, 10.8%; Computer software & programming, 10.5%; Industrial, 9.0%; Consumer non-durables, 7.7%; Electronics & electrical equipment, 6.3%; Vehicles & transportation, 5.7%; Pharmaceuticals, 5.3%; Food, 3.0%; Engineering, 2.4%; Chemicals, 1.0%; and Metals & mining, 0.6%.

We still like the long-term outlook for Indian stocks. However, India Fund now sells for a wide 12% premium above the value of its assets. That’s unreasonable, even given India’s prospects.

India Fund is a hold if you own it, but we advise against new buying.

NEW IRELAND FUND $9.20 (New York symbol IRL; Shares outstanding: 5.1 million; Market cap: $47.2 million; CWA Rating: Aggressive) invests in Irish companies. The fund’s manager is the Bank of Ireland, which dates back to 1783.

The Irish economy has slowed along with lower housing prices in the country, plus a slowdown in exports. Longer term, the country’s openness to foreign investment will continue to pay off. Ireland is part of the Euro currency system. It has also invested heavily in education and worker training.

The New Ireland Fund’s top holdings at last report were: CRH plc (building materials), 25.6%; Ryanair Holdings (airline), 11.4%; Allied Irish Banks at 8.9%; DCC (distribution), 6.1%; Aryzta plc (agriculture & food), 5.8%; Elan Corp. (Healthcare services), 5.6%,– Kerry Group (food products), 5.4%; United Drug plc (Healthcare services), 3.4%; Origin Enterprises (agriculture), 2.7%; and Norkom Group (financial crime detection), 2.6%.

The industry exposure of the stocks in the New Ireland Fund is as follows: Construction/building materials, 23.2%; Financial, 16.3%; Healthcare services, 13.1%; Food & beverages, 9.9%; Transport, 8.9%; Business services, 5.9%; Diversified financial services, 5.4%; and Food & agriculture, 4.6%.

The New Ireland Fund trades for 8% less than the value of its assets. The fund is still a buy.