Emerging market stocks have been on a wild ride since the beginning of the "COVID market regime" last year. This market regime is generally classified by high fiscal and trade deficits in developed countries and
VWO: China's Business Crackdown May Only Be Beginning
Summary
- Emerging market indices have underperformed this year largely due to immense declines in the Chinese stock market.
- Popular emerging market ETFs like VWO carry significant exposure to China, with up to 60% of its assets tied to the country.
- China has recently enacted a slew of regulatory attacks on foreign listed firms, proving that foreign investors do not control Chinese corporations.
- While VWO remains uninvestable due to its Chinese concentration risk, there are still many attractive emerging market single-country ETFs to choose from.
- In my view, those with growing exports such as Russia, Mexico, and Peru are attractive alternatives to VWO due to their strong position in the inflationary market regime.
Harrison is a financial analyst who has been writing on Seeking Alpha since 2018 and has closely followed the market for over a decade. He has professional experience in the private equity, real estate, and economic research industry. Harrison also has an academic background in financial econometrics, economic forecasting, and global monetary economics.
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