Immediately following the stunning Brexit vote, emerging markets stocks and exchange traded funds may not be the first asset class investors are running to embrace, but there are some encouraging technical signs for ETFs such as the popular iShares MSCI Emerging Markets ETF (NYSEArca: EEM).
Commodities prices are rebounding, in turn bolstering some emerging economies, such as Russia, Brazil and other Latin American nations that are represented in EEM and VWO. Still, some market observers acknowledge emerging markets appear inexpensive because earnings growth is contracting with little sign of rebounding in the near-term.
Related: Russia Leveraged ETF Punished
Tactical investors willing to embrace some higher beta single-country ETFs, such as the VanEck Vectors Russia ETF (NYSEArca: RSX) and the iShares MSCI Russia Capped Index Fund (NYSEArca: ERUS) can also find some favorable technical setups.
RSX “is now in a trading range that is sitting on its 50-day moving average. With the rising average as support, that gives the market a bullish bent. So does the breakout to the upside through a two-year trendline seen in March,” reports Michael Kahn for Barron’s.[related_stories]
Russia ETFs have impressed this year particularly when considering market observers widely expect Russia’s worst post-Soviet era recession to extend throughout this year. Onlookers remain cautious over the market outlook. While President Vladimir Putin and other Russian politicians argue that the worst is over, the economy is expected to remain in a recession for the year. Russia’s GDP is expected to contract again this year, extending what is becoming a lengthy recession.
Economic observers are remain cautious over the market outlook. While President Vladimir Putin and other Russian politicians argue that the worst is over, the economy is expected to remain in a recession for the year.