By Steven Orlowski
Utilizing the Financial Times Global Equity Macromap (which is found in the sidebar at the FT’s beyondbrics blog), I made the observation that the five best performing equity markets for the twelve month period ending 12/03/2012 were emerging markets.
The list of the top five is as follows:
S&P CNX Nifty India 16.87%
FTSE/JSE All Share South Africa 16.68%
WIG Poland 15.71%
MXSE IPC Mexico 15.15%
Hang Seng 14.26%
I then took a look at ETFs from each of the represented regions. First is the iShares S&P India Nifty 50 Index Fund (INDY).
INDY is up for the year, as it should be given the index performance, but investors in the fund have been plagued by extreme volatility. The fund has seen a low near $19.00 per share and a high near $26.00 per share. The price has been consolidating lately and looks to be setting up for a breakout, likely higher, although a 10% retracement is possible first.
Next is the iShares MSCI South Africa Index ETF (EZA).
EZA has also been quite volatile and consolidating. It is currently trading near the bottom of its range and is also poised for a breakout. However, which likely direction is not implied clearly in the chart. Caution is advised, as this looks to go south as easily as it may go north.
Poland, here represented by the iShares MSCI Poland Investable Market Index Fund (EPOL), has a slightly greater upside bias. Not without its own volatility, EPOL has been in a more conclusive trading channel and is currently near the top of its range. Poland is not without challenges, but it is also not on everyone’s radar. Continued progress and additional investment flows into the country should help this trend continue.
Mexico has been doing well and is the focus of some recent attention, as there is speculation that the globalization movement is reversing and this will positively affect the country. Mexico’s geographic proximity to its biggest trading partner (the U.S.) and its ability to compete with China could propel EWW higher continuing its current positive trend.
Last on the list of out-performers is the Hang Seng, Hong Kong’s stock index. Often lumped in with China, the Hang Seng has been outperforming the mainland.
Since June of 2012, the trend has been decidedly higher. It is important to understand the relationship between Hong Kong and mainland China. Some investors may be ignoring funds like EWH because of the mainland’s slowdown and the under-performance of related investments.
The results I got from the FT’s macromap were enlightening, if not surprising. I still expect the best performance results to come from outside the U.S. in the near and distant future.