We have made the following adjustments to the EMCHI as of April 15th: Baidu (BIDU, quote) and Tencent (TCEHY, quote) as mega-cap plays in the index already occupy the two largest weightings but have seen healthy pullbacks to core support and remain the best mix of proven revenue growth and valuation attractiveness.
Our spread analysis of Emerging Market equities vs Developed Market equities failed to breach the .2300 level as we proposed last week after an 11% outperformance move over the preceding 4 weeks.
The recent Emerging Market rally is built off a combination of fundamental and technical factors.
Folks, rotation is good ultimately but not for momentum stocks, and this has been going on for months, not days.
As per Merrill Lynch, you would be up 48% on the spread.
Today is the 18th day of 21 days where Emerging Market equities have outperformed the SPX.
Emerging Market Funds, both dedicated and ETFs, have now strung together two consecutive weeks of inflows for the first time in 6 months.
S&P is having its fourth worst day of the year (-1.6%), but Emerging Markets only down 40bps.