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Turkey, China Stocks Drag Down Emerging Markets Again

By  +Follow December 19, 2013 1:28PM
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The iShares Emerging Markets Index ETF (EEM) dropped over 1.5 percent on Thursday, showing losses the day after the long-awaited announcement of the tapering of quantitative easing.

However, the downward pressure on global stock markets appears to be driven by factors other than concerns of the Federal Reserve’s policy making. In a story similar to that on Tuesday, it appears as though plunging equities markets in Turkey and China are the greater causes of Thursday’s decline.

Fed Tapers Bond-Buying Program

The decision to roll back the rate at which the Fed would purchase bonds by $10 billion a month to $75 billion a month was announced by Ben Bernanke. He also reassured markets that interest rates would stay at or near zero into the future, even beyond the point where unemployment fell below 6.5 percent.

This news about interest rates, paired with general optimism based on a healthy American economy, is generally being cited as one of the primary factors driving the major spike experienced by American stock markets immediately after Bernanke’s announcement. And EEM joined in that rally, spiking 2 percent in less than 10 minutes after the 2 pm announcement and providing further evidence that the taper announcement is most likely not creating a great deal of downward pressure on global markets.

Turkey’s Saga Continues

The corruption probe in Turkey took on a new tenor Wednesday as 10 police commanders leading the investigation were suspended. News out of Turkey now indicates that the corruption saga could be part of a larger political struggle between an Islamist movement led by cleric Fethullah Gulen, who currently resides in Pennsylvania, and forces within the government including Prime Minister Recep Tayyip Erdogan. The movement is believed to have allies in the police and judiciary, prompting the backlash Wednesday by Erdogan.

Regardless of what lies at the source of the political struggle, it continues to hurt Turkish equities. The iShares MSCI Turkey Index ETF (TUR) fell almost 4.5 percent on Thursday, making losses since Tuesday’s dawn raids that led to the arrest of the sons of three cabinet ministers over 8.5 percent.

China Stocks Decline for Eighth Straight Day

Chinese equities continued a losing streak that appears to have the potential to last two straight weeks as major indicies declined for the eighth consecutive day. China ETFs were down accordingly, with the iShares FTSE China 25 Index ETF (FXI) off almost 2 percent and the iShares MSCI China Index Fund (MCHI) declining over 1.75 percent.

Driving the losses are concerns that China’s crackdown on credit markets will hold back economic growth as the cost of funding increases.

“Liquidity is still tight at the end of the year and there’s still downward pressure due to new stock supply in January,” said Zhang Haidong, an analyst at Tebon Securities Co. in Shanghai. “Until we see concrete evidence that the economy is going to be strong again, the market will remain weak.”

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for EEM
Alex Salomon
21 Nov 14 08:17:35
@andrewunknown I feel odd on this one, I am long $OIL, $EEM, $FXI, $EPI and my hedge is short $SPY as of this morning. We'll see.
Jorge
21 Nov 14 08:15:37
RT @julianyosovitch: muy atento al cierre de $VALE .. si ves una suba del oro y una suba de $EEM quiza vale sea explosiva.. no se de pronto…
Julian
21 Nov 14 08:07:05
muy atento al cierre de $VALE .. si ves una suba del oro y una suba de $EEM quiza vale sea explosiva.. no se de pronto se me ocurre un trade
Investors Hangout
21 Nov 14 08:04:50
lookn4wins: $EEM TA $EEM Most recent stock chart and http://t.co/SzTdxW6Y92
Investors Hangout
21 Nov 14 08:04:44
lookn4wins: $EEM TA $EEM Most recent stock chart and http://t.co/IS3kecz0Ll
Julian
21 Nov 14 08:04:35
me gusta el $EMB p/inversores cautelosos q quieran estar in en deuda $EEM buena suba esta semana deja señales alcistas, cortesía de @gneffa
lookn4wins
21 Nov 14 07:56:55
$EEM TA $EEM Most recent stock chart and technical analysis. $GOOGL $ERX $ERY $DGAZ $CSCO $GS http://stockchar http://t.co/qaoFk4RI6z
Etos Etana
21 Nov 14 07:52:25
RT @IHPosts: DennyT: FNV Investopedia $FNV $EEM $CANF $HTZ $USLV Buy http://t.co/zDdoDP7eaU
Investors Hangout
21 Nov 14 07:47:39
DennyT: FNV Investopedia $FNV $EEM $CANF $HTZ $USLV Buy http://t.co/zDdoDP7eaU
Investors Hangout
21 Nov 14 07:47:34
DennyT: FNV Investopedia $FNV $EEM $CANF $HTZ $USLV Buy http://t.co/63m4Xx0STh
Bottom Picker
21 Nov 14 07:43:45
Long $ES futures 2067.75 against $EEM 42 puts next wk
BacardiTrader
21 Nov 14 07:11:21
que brincototote dio $EEM
Al Sabogal
21 Nov 14 07:08:10
$EEM having a great day...highlighted this as a great r/r trade weeks ago & posted going long calls http://t.co/2U1pLI4ORK
Mark McCisco
21 Nov 14 07:00:08
$EEM early strength in Emerging Markets up over 2%
Investors Hangout
21 Nov 14 06:58:40
danrocks: $CRM Hitting Buzz $BBRY $ARIA $TALK $DVN $EEM http://t.co/SAfNQI2hgv
Investors Hangout
21 Nov 14 06:58:22
danrocks: $CRM Hitting Buzz $BBRY $ARIA $TALK $DVN $EEM http://t.co/XRkeq1lX4u
Jorge
21 Nov 14 06:52:16
RT @julianyosovitch: volando china y emergenets $FXI $EEM
ETF.com
21 Nov 14 06:50:10
New Emerging Internet ETF Fills Big EEM Void $EEM http://t.co/Q5bF7SIz7s
Ricardo Ex-BBB
21 Nov 14 06:45:52
RT @BRICBreaker: Joaquim Levy would be aa better Brazil FinMin than Trabuco. Asset mgr, ex-IMF. A truly global nomad. He's my pick now. $EW…
Kenneth Rapoza
21 Nov 14 06:43:59
Joaquim Levy would be aa better Brazil FinMin than Trabuco. Asset mgr, ex-IMF. A truly global nomad. He's my pick now. $EWZ $BRF $EEM
Gabriela Gutierrez
21 Nov 14 06:41:49
RT @julianyosovitch: volando china y emergenets $FXI $EEM
danrocks
21 Nov 14 06:41:20
$CRM Hitting Buzz $BBRY $ARIA $TALK $DVN $EEM http://t.co/Nju8AkwgPS
Julian
21 Nov 14 06:36:03
vamos q llegamos! Los Mercados Emergentes podrían cotizar en 43,60 dólares - See more at: http://t.co/fodcEB5But @Saladeinversion $EEM
German Fermo
21 Nov 14 06:33:31
RT @julianyosovitch: volando china y emergenets $FXI $EEM
Julian
21 Nov 14 06:33:17
volando china y emergenets $FXI $EEM
Gustavo Villa V.A.
21 Nov 14 06:08:39
Aqui viene su Santa rally, cuando parecia que ya no llegaba... $IPC $EWW $EEM
Eugene #Weltmeister
21 Nov 14 06:01:20
RT @YahooFinance: Avoiding the Recency Bias in Foreign Stock Markets http://t.co/h0zF74nLiz via @awealthofcs $SPY $EEM http://t.co/0OJ5IsoJ…
elisabetta sgorbini
21 Nov 14 06:00:55
RT @YahooFinance: Avoiding the Recency Bias in Foreign Stock Markets http://t.co/h0zF74nLiz via @awealthofcs $SPY $EEM http://t.co/0OJ5IsoJ…
FOREX Insight
21 Nov 14 05:59:17
RT @YahooFinance: Avoiding the Recency Bias in Foreign Stock Markets http://t.co/h0zF74nLiz via @awealthofcs $SPY $EEM http://t.co/0OJ5IsoJ…
John Michael
21 Nov 14 05:57:39
RT @YahooFinance: Avoiding the Recency Bias in Foreign Stock Markets http://t.co/h0zF74nLiz via @awealthofcs $SPY $EEM http://t.co/0OJ5IsoJ…
Lawyers Switzerland
21 Nov 14 05:52:53
RT @YahooFinance: Avoiding the Recency Bias in Foreign Stock Markets http://t.co/h0zF74nLiz via @awealthofcs $SPY $EEM http://t.co/0OJ5IsoJ…
Yahoo Finance
21 Nov 14 05:52:03
Avoiding the Recency Bias in Foreign Stock Markets http://t.co/h0zF74nLiz via @awealthofcs $SPY $EEM http://t.co/0OJ5IsoJzu
Juan Carlos Minero
21 Nov 14 04:54:29
$EEM +1.90% can you say....BOOM.! Emerging markets expected to soar. http://t.co/tTWGYAwiIk
Albemarle Schott
21 Nov 14 04:33:07
2014 Outlook: Enter Volatility … $AGG $CEF $DBC $EEM $EMB $EPI $EWZ $FXI $GLD $HYG $IYR $LQD $MUB $PFF $SLV $SPY
PennyStock Zone
21 Nov 14 04:10:02
http://t.co/37mHH9cdhB <-- 2 stocks trading books: 1 entertaining and 1 educational! Both awesome! $TE $EEM $BIND $DENN $KR
Seeking Alpha - All
21 Nov 14 03:21:22
Dynamics Of A New Regime: What's Changed Around The World? http://t.co/dEUcvC5WrC $EEM $FXI $VWO $DXJ $EWJ $VGK $VB $EDC $FEZ $VO $VBR
lookn4wins
20 Nov 14 22:24:59
EEM 2.94 Stock Charts $EEM Electricite et Eaux de Madagascar (EPA) Any opinions on EEM? Please reply to this p http://t.co/40IW6m8ila
RMB Investor
20 Nov 14 17:52:42
RT @hedgefundclone: $EEM If You have money in Emerging Markets, you might as well flush it down the toilet, bc when Russia Defaults Again, …
BillionairesPort
20 Nov 14 17:38:22
$EEM If You have money in Emerging Markets, you might as well flush it down the toilet, bc when Russia Defaults Again, Emerging Mkts Over
Seeking Alpha - All
20 Nov 14 17:16:33
EMHD And EMDG: Promising Funds That Have Attached Little Attention, So Far http://t.co/eLdblHzxy8 $DVYE $EEM $EMHD $EMDG
) * 和平
20 Nov 14 15:10:49
'home' i$ where u can b 'happy', locked out$ide cold $ocietie$ where nobody $eem$ 2care co$ people only care bout being...at $elfi$h 'home$'
DrillingMaps.com
20 Nov 14 15:06:04
Great video explaining the bubble popping due to yield chasing on $EEM $USO and strong $USD https://t.co/AwLxiP1Bc5
jeffcohn
20 Nov 14 15:06:04
Great video explaining the bubble popping due to yield chasing on $EEM $USO and strong $USD https://t.co/wRPq5z7Wsk
PowerPlantMaps.com
20 Nov 14 15:02:35
RT @drillingmaps: Great video explaining how the next bubble is popping due to strong $USD vs hedge funds chasing yield on $EEM $USO $TLT
RefineryMaps.com
20 Nov 14 15:02:35
RT @drillingmaps: Great video explaining how the next bubble is popping due to strong $USD vs hedge funds chasing yield on $EEM $USO $TLT
Stop Oil in Hermosa
20 Nov 14 15:02:35
RT @drillingmaps: Great video explaining how the next bubble is popping due to strong $USD vs hedge funds chasing yield on $EEM $USO $TLT
DrillingMaps.com
20 Nov 14 15:00:59
Great video explaining how the next bubble is popping due to strong $USD vs hedge funds chasing yield on $EEM $USO $TLT
NigeriaRetweeTs
20 Nov 14 14:21:00
RT @DeFotis: Nigeria Political Chaos Breeds Uncertainty http://t.co/ohXEW8VykM $NGE $EEM #Africa Thanks: @gwill29
JenniferLynneSeeleyⁿ
20 Nov 14 13:07:08
Hmm @Pontifex must be talking about @ErosAdams who's "A CHRISTIAN" because "#the #Christian #POPES" $EEM full of LOT$ of "#DOUCHEBAGGERY" ⛪💩
Grace ℓ. Williams
20 Nov 14 12:49:33
RT @DeFotis: Nigeria Political Chaos Breeds Uncertainty http://t.co/ohXEW8VykM $NGE $EEM #Africa Thanks: @gwill29
				
				
By  +Follow December 19, 2013 1:28PM
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