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.
Chart Courtesy: Bar Chart
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.
Chart Courtesy: Direxion
Tom Lydon’s clients own shares of EEM.