There were signs late last year that 2014 could be another rough time for developing world stocks. Over the past month, 24 of the 30 worst non-leveraged ETFs are emerging markets funds. Of the unlucky 13 on that list, five are Latin America ETFs, including the downtrodden iShares MSCI Brazil Capped ETF (NYSEArca: EWZ).
Speaking of 13, that is how many ETFs have made new all-time lows to this point in Friday’s session, nine of which are emerging markets funds. In proof that some folks should stop hoping for a divergence, decoupling or related move with developing credit markets, three of those nine emerging markets ETFs that hold bonds denominated in local currencies.
All of this excellent news for emerging markets bears with appetites for risk. As of Thursday’s close, the three best ETFs year-to-date in Direxion’s stable are the Direxion Daily Brazil 3x Bear Shares (NYSEArca: BRZS), the Direxion Daily FTSE China Bear 3X Shares (NYSEArca: YANG) and the Direxion Daily Korea 3x Bear Shares (NYSEArca: KORZ).
On Thursday, Direxion’s top five inverse, leveraged ETFS were all emerging markets funds.
Tom Lydon’s clients own shares of EEM.