“Anytime you see risk and fear coming, you see emerging markets get hit a bit more,” Nathalie Wallace, a senior portfolio manager at Batterymarch Financial Management, said. “It doesn’t mean the underlying fundamentals of the economy have changed.” [ETF Chart of the Day: Emerging Markets]
Overall, the global economy does appear to have a slowdown trend in the making. Analysts say that valuations within the emerging markets sector are reflecting a deep slowdown.
Europe’s banks provide about two-thirds of the foreign lending to global emerging economies.
“The possibility that European banks might reduce their exposure to Asia as part of their recapitalization effort is something that has to be taken seriously,” Michael Spencer of Deutsche Bank told clients, warning of risks to the likes of Vietnam, South Korea, Indonesia and India. [Emerging Market ETFs Need to Take Leadership Role]
Broad-based emerging market ETFs:
- iShares MSCI Emerging Markets
- Vanguard Emerging Markets ETF (NYSEArca: VWO)
- SPDR S&P Emerging Markets ETF (NYSEArca: GMM)
- Schwab Emerging Markets ETF (NYSEArca: SCHE)
Vanguard Emerging Markets ETF
Tisha Guerrero contributed to this article.
Full disclosure: Tom Lydon’s clients own SPY.