“Emerging economies that rely almost exclusively on natural resources” are to be avoided, Ablin added, arguing that shares of companies based in these countries will suffer as the price of oil and other commodities fall.
The weekly chart of the iShares MSCI Emerging Markets ETF (NYSEArca: EEM) relative to the SPDR S&P 500 ETF (NYSEArca: SPY) reveals that the emerging markets have been underperforming U.S. markets. [A Return to Emerging Market ETFs]
For more information on developing economies, visit our emerging markets category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own shares of SPY.