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.
We regularly compare the nations of China, Brazil, South Korea, Taiwan, South Africa, Russia, India, Mexico, Malaysia and Indonesia against the broader Vanguard Emerging Markets ETF (VWO, quote) to see where momentum is picking up and where it lags. The following is an assessment of six country ETFs that are showing strong outperformance potential relative to broader emerging markets.
Like many emerging markets, South Africa is struggling to find an equilibrium between taming inflation and bolstering growth. After the latest inflation numbers came in at 6.3%, higher than the central bank’s target range, pundits have started to question the appropriateness of the Reserve Bank’s price stability mandate with some calling for a constitutional amendment to scrap said mandate.
The best performing stocks from last year gained only 2% in the first three weeks of 2012. The worst performers of 2011 climbed 11%. This has been true in the currency markets as well.
After the ferocious recovery we saw a few weeks ago, emerging markets currencies are back in decline. This is theoretically an opportunity to buy weakness, but the moment may not be yet.
Were Tuesday’s move in the emerging market equities sustainable? Too rich now? The latest installment of Trading the Globe provided a few answers.