Wednesday, August 21, 2013

Emerging Markets Still Scoring Well

As the financial media declares the emerging markets have submerged, Quant isn’t as dismissive but scores on recently highlighted funds have come down with poor tape action.  China’s GXC and FXI have held up best at 2nd and 5th place today with the former still retaining the 10 Green Diamond Reward Rating.  The PowerShares S&P Emerging Markets Low Volatility Portfolio (EELV) has managed to stay in the top 10 at 8th place but the other 2 EM funds that also dominated the ranks on August 12th, GMM and DEM, have slipped down to 25th and 48th place.  The slippage comes on the Behavioral side as strong fundamentals look even better with lower prices.

The weakest of the group, DEM has seen its technical score come down from 60.6 on August 12th to 24.6 today as the fund has lost 3%.  That has brought out some bears to boost its sentiment score up to 68.5 but not enough to offset those very weak technicals.  Value investors have to love its very strong 90 Fundamental Score keeping it in the upper ranks.  GMM’s chart since then looks similar to DEM’s but longer term looks better as does its 55.8 technical score.  Better performance usually correlates with weaker sentiment but at 53.8 it is enough to keep GMM’s Behavioral Score above 50 and its 88 Fundamental Score keeps it in the top 25.  EELV sees both Behavioral categories below 50 but its 97.9 Fundamental Score says it is about as cheap as it has ever been in its 19 months of trading.  GXC and FXI have been with us since before the crash and also score well fundamentally.  Launched in March of 2007, GXC’s 98.2 might not look as good if it had been around since 2004 like FXI with an also strong 80.6.  Technicals have come down below 70 today for each and FXI has better sentiment readings as its 25 constituents have attracted more bears than the 213 in GXC.  Both China funds are exposed to Hong Kong dollars which have avoided the brunt of the emerging markets selloff this week.

Today’s release of Fed minutes may alleviate or exacerbate that volatility and so might the presentations in Jackson Hole later this week.  Quant has backed off its emerging markets stance somewhat but hasn’t given up.  We will watch it over coming days so please check in each day to ETF Global® Daily Perspectives.

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