By
Gary Gordon
:
There has been so much negativity with regard to emerging Asian
equities over the last 12-18 months. Some of it has been
attributable to concerns of a "hard economic landing" in China,
while some of it has been due to fears regarding Europe's recession
and debt crisis.
Nevertheless, U.S. equities are at the higher end of the S&P
500's trading range (1278-1420). And with one of my
favorite emerging growth investments
in iShares MSCI Malaysia (
EWM
) logging respectable year-to-date returns, I decided to check up
on the progress of 10 of the most popular emerging Asian ETFs.
| Year-To-Date Performance
For 10 Popular Emerging Asia ETFs (Through 7/30) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD % |
|
|
|
|
|
|
|
|
| iShares MSCI Philippines
Index Fund (
EPHE
) |
|
|
27.1% |
| Market Vectors Vietnam
ETF (
VNM
) |
|
|
21.3% |
| iShares MSCI Thailand
Index Fund (
THD
) |
|
|
14.9% |
| iShares MSCI Malaysia (
EWM
) |
|
|
|
7.5% |
| WisdomTree India
Earnings (
EPI
) |
|
|
6.6% |
| SPDR S&P Emerging
Asia Pacific (GMF) |
|
|
3.5% |
| iShares MSCI China
(MCHI) |
|
|
|
1.3% |
| SPDR S&P China
(GXC) |
|
|
|
1.1% |
| Market Vectors Indonesia
(IDX) |
|
|
|
0.8% |
| Guggenheim China Small
Cap (HAO) |
|
|
-2.3% |
|
|
|
|
|
|
|
|
| SPDR S&P 500
(SPY) |
|
|
|
|
9.7% |
Only 3 of the Asian ETFs have out-hustled the SPDR S&P 500
(SPY) through the end of July. On the other hand, 80% of these ETFs
demonstrated positive 50-day slopes that are, by definition,
uptrends. Thailand (
THD
), Malaysia (
EWM
) and the Philippines (
EPHE
) have not only had strong year-to-date performance showings, but
they currently have positive slopes. Five other ETFs have turned a
positive slope corner for the first time since March.
Using the 50-day slope, Guggenheim Small-Cap China (HAO) and
Market Vectors Vietnam (
VNM
) are the only exchange-traded trackers in downtrends. Still, VNM
managed to post the strongest percentage gains on the list.
Will the uptrends last? They may, in fact, be somewhat
tenuous.
For instance, the current price of SPDR Emerging Asia (GMF) is
above a 50-day moving average. What's more, the slope is not only
positive, but it has been rising since early June.
(click to enlarge)
That said, GMF last demonstrated a positive, rising slope at the
start of the year. Then, 10-year treasuries yields in key eurozone
nations were falling; today, they remain stubbornly high at
unsustainable levels.
It follows that emerging Asia ETFs are likely to take cues from
a variety of upcoming data points. One, the European Central Bank
((ECB)) will need to purchase more sovereign debt. Not only do the
overwhelming majority of economists, money managers and
institutional traders expect it, there's little hope for stocks of
any region without the expected stimulus.
Second, policy easing in China needs to have verifiable
benefits. For example, China's recent 5-month high on its "Flash"
Manufacturing PMI needs confirmation. Moving from contraction to
expansion in Chinese manufacturing will be key in the weeks and
months ahead, not only for the domestic economy, but for
neighboring Asian emergers that profit from regional trade.
For some of my clients, I am comfortable purchasing iShares
Malaysia (
EWM
) on the strength of the country's fundamentals and technicals
today. Malaysia enjoys low inflation, solid domestic growth and
remarkably low unemployment. Meanwhile, the ETF sports a 3.8% yield
that rivals many dividend funds. Moreover, the current price for
EWM is above a 50-day and a 200-day trendline.
(click to enlarge)
By the same token, every asset and every asset class can
depreciate rapidly. I do not take chances with client portfolios.
It follows that every buy decision comes with a firm understanding
of
the conditions under which I would sell
.
Disclosure
: Gary Gordon, MS, CFP is the president of Pacific Park Financial,
Inc., a Registered Investment Adviser with the SEC. Gary Gordon,
Pacific Park Financial, Inc, and/or its clients may hold positions
in the ETFs, mutual funds, and/or any investment asset mentioned
above. The commentary does not constitute individualized investment
advice. The opinions offered herein are not personalized
recommendations to buy, sell or hold securities. At times, issuers
of exchange-traded products compensate Pacific Park Financial, Inc.
or its subsidiaries for advertising at the ETF Expert web site. ETF
Expert content is created independently of any advertising
relationships.
See also
Today In Commodities: No Stopping Stocks
on seekingalpha.com