U.S. markets haven’t exactly been holding up well to start 2014. Concerns about jobs and the taper have hit American securities, and led to a bit of a sell-off to open up the year.
However, if you thought trading was getting bad in the U.S. market, you should definitely look away from the emerging market space. Equities in this part of the investing world have been even harder hit by the taper, and many are experiencing capital flight issues (See Best ETF Strategies for 2014).
To fight this, several nations have been raising their rates, a policy that could stem the tide of outflows. This has had little impact so far though, and especially so for the following four nations:
India- Inflation concerns are heating up in India, while concerns over an election aren’t helping matters either. Thanks to these worries, along with the taper in the U.S., the most popular India ETF, the WisdomTree India Earnings Fund (EPI) has lost about 8% in the past month, and could face more weakness in the months ahead.
Turkey- 2013 was not Turkey’s year as political issues and a currency crisis hurt the nation pretty badly. However, 2014 doesn’t appear to be shaping up too well either, as the iShares MSCI Turkey ETF (TUR) has lost over 10% since the start of 2014, and this comes despite a huge rate hike recently (read 3 Emerging Markets to Watch for Political Issues in 2014).
Brazil- The largest country in South America has also faced severe currency issues, though a series of rate hikes has done little to stop the problem. In fact, the iShares MSCI Brazil Capped ETF (EWZ) has lost over 9% YTD and nearly 23% in the past three months.
South Africa- Despite having a plethora of in-demand commodities, South Africa hasn’t been immune to the selling pressure, and it too raised rates at its most recent meeting. And now the main way to play the country, the iShares MSCI South Africa Index ETF (EZA), has lost over 12% in the past month, and over 15% in the trailing three month period.
For more on these nations and how they have been performing, make sure to watch our short video below:
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