Weakening currencies have also weighed on emerging market ETFs in 2013.
The question for investors is if emerging markets are undervalued after the sell-off.
Emerging markets are “unambiguously cheap” right now, Russ Koesterich, global chief investment strategist at BlackRock, told CNBC.
“We will see some better performance,” he said. “The issues there are real. The question for investors is how much is this reflected in price? EM [is]currently trading at about a 35% discount to developed markets. Historically, that’s been a good entry point.”
The chart below shows the relative performance of the emerging market ETF (EEM) against the S&P 500 (SPY). The chart is testing a key horizontal resistance line. [Waiting for The Turn In Emerging Markets ETFs]
Full disclosure: Tom Lydon’s clients own SPY and EEM.