Emerging markets have been off to the races in 2017 and China has played a huge role in fueling that growth. The world’s second largest economy felt the heavy contraction that plagued many stock markets throughout 2015 as commodity and currency volatility took their toll. However, its turning point coincided with a global rally in risk assets that has been persistently strengthening over the last eighteen months. Read more
January was a rough month in the stock market by almost any metric. From an index standpoint, the U.S. concentrated SPDR S&P 500 ETF (SPY) dropped 5.07%, while the globally oriented iShares MSCI ACWI ETF (ACWI) fell 5.30%. Both benchmarks would have been substantially worse if not for a late month rally that was spurred by oversold conditions alongside a sizeable rally in crude oil prices.
Many investors are now succumbing to the realization that volatility happens quickly and with little advance warning. In fact, several high growth sectors experienced jaw-dropping moves in the month of January that are good examples of how quickly gains can evaporate in the midst of adverse conditions.
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.