Encouraging Signs for Emerging Markets ETFs
Immediately following the stunning Brexit vote, emerging markets stocks and exchange traded funds may not be the first asset class investors are running to embrace, but there are some encouraging technical signs for ETFs such as the popular iShares MSCI Emerging Markets ETF (EEM) .
Commodities prices are rebounding, in turn bolstering some emerging economies, such as Russia, Brazil and other Latin American nations that are represented in EEM and VWO. Still, some market observers acknowledge emerging markets appear inexpensive because earnings growth is contracting with little sign of rebounding in the near-term.
Related: Russia Leveraged ETF Punished
Tactical investors willing to embrace some higher beta single-country ETFs, such as the VanEck Vectors Russia ETF (RSX) and the iShares MSCI Russia Capped Index Fund (ERUS) can also find some favorable technical setups.
RSX “is now in a trading range that is sitting on its 50-day moving average. With the rising average as support, that gives the market a bullish bent. So does the breakout to the upside through a two-year trendline seen in March,” reports Michael Kahn for Barron’s.
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Russia ETFs have impressed this year particularly when considering market observers widely expect Russia’s worst post-Soviet era recession to extend throughout this year. Onlookers remain cautious over the market outlook. While President Vladimir Putin and other Russian politicians argue that the worst is over, the economy is expected to remain in a recession for the year. Russia’s GDP is expected to contract again this year, extending what is becoming a lengthy recession.
Economic o bservers are remain cautious over the market outlook. While President Vladimir Putin and other Russian politicians argue that the worst is over, the economy is expected to remain in a recession for the year.
Related: Emerging Markets ETFs Keep Bleeding Assets
The iShares MSCI All Peru Capped ETF (EPU) is already this year’s best-performing emerging markets single-country exchange traded funds, but is also sporting a chart that could portend more upside ahead.
“The Peru ETF chart reflects that strength and even resisted the pullback. Again, a breakout above the triangle pattern would be another good sign for the bulls. The caveat is that daily trading volume here is in the low side so it is a bit riskier than other ETFs,” according to Barron’s.
Thanks to rebounding gold and silver prices and favorable results in the country’s recent presidential election, Peru is giving global investors reasons to give the South American economy another look and that should help EPU.
Related: Peru ETF Makes a Big Move on Pro-Market Presidential Race
iShares MSCI Emerging Markets ETF
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
