Emerging Market ETFs Now in Midst of Largest Rally Since 2007

Jacob Harper |

The late spring and early summer had been tough times for emerging market ETFs, especially those tied to Brazil, Turkey, and India. But those three countries have started to see incremental improvement late this summer on positive economic developments, correcting the long slide that has plagued emerging markets since the spring. Those emerging markets have been propped up by good news both domestically and from China, whose surging growth seems to have little chance of slowing down.

China posted both better-than-expected import/export data in August and increased industrial growth, giving comfort to investors who feared that country’s long-lasting construction boom was coming to a halt. The markets of countries that are economically closely tied to China like Brazil have responded enthusiastically, with that country’s stock market, the Ibovespa, entering a bull market on Wednesday.  Brazil’s chief iron ore exporter Vale SA (VALE) has been especially pleased by the Chinese trade numbers, gaining over 15 percent in value since late August.

Indian and Turkish ETFs, which both had big days on Sept 9, are likewise in the midst of a major rally, rebounding from major setbacks this year. Turkey has benefited from the increasing likelihood that the US will not militarily intervene in neighboring Syria, and India from sweeping economic reforms engineered by new Reserve Bank chief Raghuram Rajan

One of the most comprehensive emerging market ETFs, iShares MSCI Emerging Markets (EEM) has regained over 10 percent of its value since Aug. 27 to hit $41.44 a share. The popular iShares MSCI Brazil Capped ($EWZ) has likewise rallied, gaining 8.16 percent since Sept 5 to hit $46.88 a share. WisdomTree India Earnings ($EPI) is up 10.64 percent on the week to hit $15.81 a share.

The big winner in the emerging market rebound has been the previously-battered Turkish ETF iShares MSCI Turkey Investment Market Index (TUR) which had suffered greatly following the "Arab Spring" that rocked the country, is in the midst of a major renaissance, gaining a whopping 11.57 percent on the week to hit $54 a share.

 

(image courtesy of Wikimedia Commons)

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Companies

Symbol Name Price Change % Volume
VALE VALE S.A. American Depositary Shares Each Represen 8.44 0.28 3.41 39,886,560
SHNWF Schroders PLC 35.23 0.95 2.77 331

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