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Are Foreign Markets Too Risky Right Now? - Real Time Insight

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While stock trading in the U.S. hasn't exactly been great the past few weeks, it has been downright brutal in markets beyond American shores. Major indexes in foreign nations were hit hard by tapering talk and strong dollar fears, pushing many to abandon these markets for the time being.

Over the past month, losses for SPY were about 0.2%, while the Dow, as represented by DIA , actually added about 0.4% in the time frame. This is in sharp contrast to many other markets around the globe, including the following nations:

Country ETF 1 month return
Indonesia EIDO -15.8%
Philippines EPHE -16.6%
Thailand THD -16.8%
Turkey TUR -19.8%

But before you think that these issues were exclusive to risky emerging markets, consider the following crashes in developed markets as well:

Country ETF 1 month return
Singapore EWS -10.4%
New Zealand ENZL -10.6%
Japan (currency hedged) DXJ -11.1%
Australia EWA -14.5%

Clearly, the pain was pretty universal, although you can obviously make some generalizations about the recent trend. The worst of it seems to have been in the Asia-Pacific region, with the outlier being Turkey due to obvious reasons (see Turkey ETF Crashes After Istanbul Protests ).

Still, this seems to be a bit of an overreaction, especially given some of the recent data points in the U.S., and how volatile Treasury bills were after the initial talk of tapering. With these kind of data points, I question the nerve of the Fed to actually follow through on tapering bond purchases later this year, suggesting that the QE fueled bull may have a bit longer to run.

But what do you think regarding this little-talked about crash?

Are you abandoning foreign markets for now, or are you buying international securities on the dip?

Let us know in the comments below!

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SPDR-DJ IND AVG (DIA): ETF Research Reports

WISDMTR-J HEF (DXJ): ETF Research Reports

ISHARS-AUSTRAL (EWA): ETF Research Reports

SPDR-SP 500 TR (SPY): ETF Research Reports

ISHRS-MSCI THAI (THD): ETF Research Reports

ISHRS-MSCI TURK (TUR): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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