Back in June we profiled several ETFs focused on the financial services sector in emerging markets. Given how vital banks and related companies are to rapidly growing economies that need to finance growth, I thought I’d review the four financials ETFs and see how they’ve done over summer.
While global markets ebb and flow on a weekly basis reacting to the ongoing, and possibly terminal problems in the European Union, emerging markets continue to provide an alternative.
Among emerging markets, China is continuing to rise on easing expectations from the People’s Bank of China, India continues to struggle, and Russia is defying the price of oil.
While the emerging markets of Brazil, Taiwan, and Mexico continue to exhibit weakness, Russia, India, South Africa, China and Malaysia all look poised to outperform over the coming weeks.
At Emerging Money we’ve addressed the idea of playing rate cuts through the China financial sector, which has been in a strong period of outperformance.
In the wake of disappointing economic data last week, the Chinese government has decided to implement measures to spur the economy. And while these measures may make Chinese banks attractive in the short-term, it will do little to solve the underlying problems in the Chinese financial sector.
The People’s Bank of China announced Saturday that it would cut reserve ratios by 50 basis points effective May 18 in an effort to counter weakening growth.
Traders convinced that China’s banking system is on the edge of collapse can use ETFs to put their money where their mouth is – but the argument that these stocks are poised for disaster has gotten harder to make.