Chile ETF Strength Defies Copper Weakness

Up 16.5% year-to-date, the iShares MSCI Chile Capped ETF (NYSEArca: ECH) is one of the best-performing emerging markets single-country exchange traded funds. It is also defying weakness in the copper market, an important factor because Chile is the world’s largest producer of the red metal.

The iPath Dow Jones-UBS Copper Subindex Total Return ETN (NYSEArca: JJC), an exchange traded note that tracks copper price movements, is a laggard showing relative to other commodities exchange traded products.

In what could prove to be a cautionary tale, JJC’s laggard status could morph into an all out decline as copper prices approach a critical technical juncture. While production cuts may support prices now, the bounce in the copper market may be short lived as fundamental factors remain weak.

Related: Strengthening Dollar Plaguing Copper ETN

“According to the number one copper producing country’s central bank, the value of Chile’s copper exports fell 16.1% in the first half, compared to H1 2015, on par with the financial crisis of 2009. Chile exported $13.4 billion worth of copper in H1, including $6.356 billion worth of copper cathodes and $5.805 billion of copper concentrate. Monthly copper exports dropped a whopping 28% to $2 billion, according to Platts, reports