Emerging markets have been marred by the trade wars between the U.S and China, causing a negative ripple effect into emerging market ETFs, such as the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO)–down 15.89% YTD, iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG)–down 16.25% YTD and iShares MSCI Emerging Markets ETF (NYSEArca: EEM)–down 16.34% YTD. On Monday, VWO climbed 2%, IEMG rose 2.14% and EEM ticked 1.92% higher.
Despite this, global markets will continue to watch the U.S.-China trade deal as negotiations unfold. Until a tangible agreement is reached, heated topics like intellectual property and forced technology transfer will need to be addressed.
“This is all constructive news for markets, however the overarching concerns in the US-China relationship remain, and thus should imply caution for markets past the short-term,” wrote Sacha Tihanyi, deputy head of emerging markets for TD Securities. “Some of the bigger, structural issues are not ones that we believe can be easily tackled in a 90-day period.”
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