Tom Lydon on CNBC: China and Emerging Market ETFs
This article was originally published on ETFTrends.com.
As Turkey contagion was unable to infect the capital markets thanks to an immunity injection of renewed talks between the United States and China to settle their trade differences, the Dow Jones Industrial Average was able to build off Thursday's gain of almost 400 points with a 110-point gain today to close the week.
The U.S. indexes returned to their upward trajectory as the Dow, Nasdaq Composite and S&P 500 are all looking at record-highs. While the markets were resilient to the effects of Turkey contagion and trade wars the past two market sessions, it doesn't mean the issues have been completely eradicated.
Chinese and the U.S. are said to be working on a plan that will include negotiations to end a trade dispute, which would see a meeting materialize between U.S. President Donald Trump and Chinese leader Xi Jinping at a summit in November. In the meantime, a nine-member delegation from China will hold meetings with key U.S. officials on Aug. 22 and Aug. 23.
The news gave China-focused ETFs and emerging markets a resuscitative gain from their year-to-date doldrums like the iShares China Large-Cap ETF (FXI) --up 1.29%, iShares MSCI China ETF (MCHI) --up 1.36% and KraneShares CSI China Internet ETF (KWEB) --up 1.52%.
Likewise, the positive gains aptly spilled over into emerging market ETFs, such as the Vanguard FTSE Emerging Markets ETF (VWO) --up 0.85%, iShares Core MSCI Emerging Markets ETF (IEMG) --up 0.97% and iShares MSCI Emerging Markets ETF (EEM) --up 1.05%. IEMG, in particular, has started to experience an uptick of inflow activity.
"About a 2% move in emerging markets and a 3% move in China-related ETFs," said Tom Lydon, president of ETF Trends. "Now I know you're watching ETFs all the time--$160 billion in new money ETFs so far this year, but the IEMG has $10 billion year to date--$2 billion just in the last month and it's had a pretty good move from getting emerging market representation for only 14 basis points."
While the two economic superpowers have locked horns, the renewed talks could resurrect China-focused ETFs and emerging market ETFs like IEMG, which has tracked down 11.3% year-to-date. With respect to value compared to price, many of these ETFs from abroad present a profitable opportunity that can be realized, especially if China and the U.S. ameliorate their trade differences.
"If these talks improve, this might be the link that everyone's looking for as far as valuations getting better, markets getting better overseas, especially emerging markets and China," added Lydon.
For more market news, visit ETFTrends.com.
POPULAR ARTICLES FROM ETFTRENDS.COM
