September 23, 2007 at 1:18 pm by Tom Lydon
The Federal Reserve’s rate cut was much appreciated and anticipated by Wall Street last week, but there was a real gain abroad for emerging markets and the exchange traded funds (ETFs) that focus on them. Latin America and Asia both got a boost, says Bill Donoghue for MarketWatch. For the week, iShares MSCI Brazil (EWZ) rose 8.3%, iShares Latin America (ILF) was up 5.7% and iShares China/Xinhua (FXI) gained 8%. The S&P 500 gained 2.8%.
There are some concerns about inflation, which is usually fought with higher interest rates. But the credit problems we are dealing with now were caused by mortgage banks within the U.S., resulting in the rate cut. Asia and Latin America may feel some of the repercussions, but are not directly affected by the U.S. loan problem. Donoghue says that even with the Fed’s actions here in the U.S., investors may want to look at opportunities found in overseas markets. Make sure you know your risk tolerance and that adding international exposure fits into your investment strategy.
Tags: Brazil, China, Emerging Markets, EWZ, Federal Reserve, FXI, Latin America
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