U.S. equities experienced a slight pullback on concerns that the Fed will cut back quantitative easing, but overseas markets, particularly emerging market exchange traded funds, witnessed heavy selling pressure as investors fled risky assets.
The iShares MSCI Turkey Investable Market Index Fund (NYSEArca: TUR) was the worst performing emerging market single country ETF over the past month, declining 19.9%. [Single-Country ETFs for Emerging Markets Slammed by Fed Talk]
In Istanbul, protestors are clashing with riot police, stoking volatility in the Turkish markets. [Turkey ETF Down Over 20% in a Month on Protest Fears]
“Since May 31, political risks that weren’t priced in before started being realized,” Cuneyt Paksoy, an investment committee member at Rhea Asset Management, said in a Bloomberg article. “We’re seeing a market reaction against uncalculated risks. We are practically in bear market territory anyway.”
The Market Vectors India Small-Cap ETF (NYSEArca: SCIF) has declined 18.2% over the past month.
India is suffering for a record high current-account deficit, which has left the economy expanding at its slowest pace in a decade and provides little room for the Reserve Bank of India to cut interest rates.
“Currency stability has become a new worry,” Rajeev Malik, an economist at CLSA Asia-Pacific Markets, said in a Bloomberg report. “A rate cut is unlikely to do much in reviving growth, but it will renew the pressure on the rupee to weaken further.”
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The iShares MSCI Philippines Investable Market Index Fund (NYSEArca: EPHE) dropped 16.6% over the last month.
The Philippine economy is grappling with rising unemployment rates and weakening export industry. [ETF Chart of the Day: Philippines]
“The high unemployment rate casts a shadow of doubt on the strength of economic growth and its sustainability,” Jonathan Ravelas, chief market strategist at BDO Unibank Inc., said in a Bloomberg article. “Whether the perception is right or wrong, it raises questions. The exports data highlights the world economy remains fragile.”
The iShares MSCI Thailand Index Fund (NYSEArca: THD) fell 16.5% over the last month.
Foreign investors are looking for the exits on mounting speculation that the U.S. Federal Reserve will taper monetary stimulus. [Travelers Love Bangkok but Investors Dumping Thailand ETF]
“Overseas investors want to take money out from Thailand’s stocks and other financial assets at any price,” Kavee Chukitkasem, an investment strategist at Kasikorn Securities Co., said in a separate Bloomberg article. “The money flow has reversed to outbound from inbound earlier this year even as the country’s overall economic and earnings growth remain sound.”
The Market Vectors Indonesia Index ETF (NYSEArca: IDX) dropped 15.7% over the last month.
Indonesian stocks is touching upon a four-month low on the depreciating rupiah currency and regional weakness.
“Apart from that the sell-off is also attributable to QE ending as well as the upcoming planned fuel price hike which would result in higher inflation and interest rates, slowing the overall economic growth of Indonesia,” Harry Su, the head of research at Jakarta-based Bahana Securities, said in a Reuters article.
The Global X FTSE Greece 20 ETF (NYSEArca: GREK) fell 13.3% over the last month.
Grek stocks experienced a 5% decline Monday after the planned sale of Depa, the state natural gas monopoly, fell through, Financial Times reports.
“There is a dearth of investable assets in Greece that offer investors decent returns,” Marc Ostwald, strategist at Monument Securities, said in a Wall Street Journal article.
For more information on the emerging markets, visit our emerging markets category.
Max Chen contributed to this article.