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.
This is done by showing the trend in the country's price ratio relative to the broader Emerging Markets ETF. A rising price ratio means the numerator/country is outperforming (up more/down less) the denominator/VWO. The Emerging Leaders Report is exclusive to Emerging Money.
Observations: China ( FXI , quote ) has surged despite weaker than estimated economic growth, signaling that investors may be betting the worst is over
Brazil remains in its own relative downtrend.
South Korea ( EWY , quote ) is hitting up against its ratio high and may have a tough time breaking through relative to broader EM.
Taiwan ( EWT , quote ) has been volatile, but may become a leader next week. South Africa ( EZA , quote ) continues to underperform as the Rand ( SZR , quote ) weakens. Russia ( RSX , quote ) appears to be stabilizing but is not yet a leader. India ( INP , quote ) is perking up, and may turn into a leader in the coming weeks. Mexico ( EWW , quote ) flipped from leader to laggard as strong equity and peso gains reversed.
Malaysia ( EWM , quote ) remains strong, but is hitting up against ratio resistance.
Despite earthquake/Tsunami concerns, Indonesia ( IDX , quote ) continues leading.
Conclusion: I noted last week that "BRICs (Brazil, Russia, India, and China) continue their underperformance within the Emerging Markets space, but that there is some improvement occurring as it relates to China and India.
No other major changes from last week's report. If strength comes back in the BRICs, it would suggest the potential equity correction in the U.S. may be short-lived as money rushes back to emerging markets in the months ahead."
China has notably improved, signaling that investors are looking ahead of recently announced weaker economic growth. In short, China is back.
This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Pension Partners, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Pension Partners, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.