The iShares MSCI South Africa ETF (NYSEArca: EZA) rose 8.3% last month even as the Market Vectors Gold Miners ETF (NYSEArca: GDX) plunged 11.9%. That is a surprising decoupling from mining equities for EZA given South Africa’s status as a major gold producer and that some analysts view South African gold miners as among the most vulnerable to further retrenchment in gold spot prices.

Even more surprising is that EZA rose in a month when the major physically-backed platinum ETF slipped 8.6% and the only palladium ETF trading in the U.S. rose just 1%. South Africa is the largest platinum producer in the world and the second-largest palladium producer behind Russia. [Metals Rebound Helping South Africa ETF]

Although the materials sector is less than 12% of EZA’s weight, or less than half the weight allocated to financial services, the fund’s largest sector weight, EZA is correlated to price action in precious metals miners. [South Africa ETF Dichotomy]

Exposure to the materials sector could again prove problematic for EZA because with gold prices laboring below $1,300 an ounce, analysts and traders are speculating about what life will look like for some miners if gold falls below $1,200 an ounce. The answer is not appealing and it is far less attractive if gold drops below $1,000 an ounce. [You Don’t Want to Know What Happens to Mining ETFs if Gold Falls Below $1,000]

EZA could face other headwinds. On Tuesday, the International Monetary Fund said Africa’s largest economy is falling behind other developing nations and must rapidly employ reforms in order to skirt economic crisis.

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