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How to play the Fed’s move in Emerging Markets?

By: Emerging Money
Posted: 12/19/2013 9:57:00 AM
Referenced Stocks:

With a major lag in emerging markets over last 3 years (we have documented at length at ( best way to play what the Fed told us yesterday is the own Korea.

[caption id="attachment_75761" align="alignright" width="300"] Image courtesy KRX The South Korean KRX exchange[/caption]

An improved U.S. economy and growing global PMIs mean the industrialized world is heating up…at least somewhat.  What it doesn't mean is that China is about to soar or stimulate or even get back to 2012 levels of GDP.

What it means is you don't want to assume lagging commodities are going to rebound quickly.  You want to own the countries who have lagged but who make their hay on the recovery in global trade and industrial cyclical.

South Korea ( EWY , quote ) is the Japan of yesteryear and is a macro story that gets better by the day.  The South Korean Won has been sagging against the U.S. dollar but has been strong against regional economies like Japan.

South Korea has a $63 billion in current account surplus and offers major linkage to improving U.S. fortunes.  Timing wise it is a good time to jump in after -3% to start to the month and pressures that were taper related on capital flows.