Emerging market countries are once again succumbing to the uncertainty of global commodity deflation combined with the over excess of speculative trading. While the world has been fixated on the machinations of high profile countries such as China and Greece, more trouble has been brewing throughout Latin America, Eastern Europe, and developing Asia regions. This confluence of events has pushed even broad-based indexes such as the iShares MSCI Emerging Market ETF (EEM) more than 16% off its recent high.
In our monthly ETF chart roundup video, we analyze the current trends of the market along with important technical indicators. The key themes to watch this month are large cap stocks, small cap stocks, volatility, China, Treasury bonds, and commodities. Recorded after the market close on July 7, 2015.
The Chinese stock market has quickly turned from one of the most red-hot areas for international growth investors to an unrelenting free-fall of equity valuations. In fact, the declines have been so swift that both the government and financial regulators are stepping in with measures designed to stabilize prices. These include interest rate cuts, margin controls, IPO halts, and even active pools of capital intended to provide liquidity and support for publicly traded Chinese companies.
For ETF investors, this recent sell off may be seen as a well-deserved break from the double and triple digit gains experienced by China indexes so far this year. It may even offer an opportunity to enter this market through a diversified vehicle with daily liquidity, transparency, and low-cost.
It seems as though more recently, the 6-month consolidation cycle in the SPDR S&P 500 ETF (SPY) alongside the concomitant volatility in fixed-income, is creating a layer of anxiety rather than ease. The feeling of nervousness as I speak with individual investors stems from the fact that growth is slowing and gains seem harder to come by. Read more
One of my favorite ETF writers, Todd Shriber of ETF Trends, recently highlighted the news that Russell Investments would be updating its FTSE Emerging Market Index to include greater China exposure. I have mixed feelings about this move for several reasons that I will get into in a moment, but first let’s explore the immediate effects of this transition. Read more