Taper talk is having a huge impact on markets, not just in the U.S., but around the world as well. In fact, several Asian emerging markets have plunged in the past few weeks losing more than 10% in the time frame.
The losses were led by extremely rough trading in the huge markets of India and Indonesia. These two giants have both faced uncertain trading conditions and thanks to sluggish currencies, current account deficits and inflationary worries, they could remain under pressure in the weeks ahead too (see Indonesia ETFs in Crash Territory on Currency Woes).
This trend has made many very bearish on broad emerging markets, and particularly on ETFs targeting nations like India (EPI - ETF report) or Indonesia (EIDO - ETF report). However, the terrible stretch hasn’t hit every emerging market, as a few have managed to soar higher and outperform despite the gloom surrounding the space.
Below, we briefly highlight a few of these top performing emerging markets and some reasons behind their surge:
While many Asian markets have faced weakness, China has rebounded from its lows in recent weeks. Many of the top performers came from those that focused on technology stocks, including (PGJ - ETF report), (QQQC - ETF report), and (CQQQ - ETF report), a group which averaged out 10% gains for the past month (see Focus on These China ETFs for Outperformance).
Others in the space also saw strength too, including a number of sectors that have seen severe weakness like financials (CHIX), infrastructure (CHXX) and materials (CHIM). These gained about 8% in the time frame, and suggested to many that broad China strength was at hand in the market.
Latin American ETFs also saw a rebound lately, led by two very different markets, Peru (EPU - ETF report) and Argentina (ARGT - ETF report). These two also have performed well after slumping earlier in the year, as EPU has added about 8.5% in the past month, while ARGT has moved higher by more than 10% in the time frame.
Peru is seeing strength thanks to some solid trading in silver, one of its key exports. Meanwhile, Argentina has moved higher despite some inflation concerns due to higher growth forecasts, and commodity strength of its own (see all the Latin American Equity ETFs here).
For more about the sluggish trading in India and Indonesia, as well as ways to play emerging market weakness in the weeks ahead, watch our short video on the subject below:
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