Use This Dip to Consider These EM ETFs (TUR, SCIN, THD)
Even with some upside today, the past five trading days have been quite unkind to major emerging markets ETFs. Just a few examples of the ugliness since Thursday March 1: The Vanguard MSCI Emerging Markets ETF (NYSE: VWO) is down almost 4%. The iShares MSCI Brazil Index Fund (NYSE: EWZ) is down more than 4%. The iShares FTSE China 25 Index Fund (NYSE: FXI) and the WisdomTree India Earnings ETF (NYSE: EPI) are both off more than 5%.
Those performances are going to win those funds ribbons at the county fair, but statistics show investors still love global ETFs. Equity-based global ETFs raked in $5.6 billion in new inflows last month and VWO hauled in $2.5 billion while the rival iShares MSCI Emerging Markets Index Fund (NYSE: EEM) garnered $1.4 billion in new assets, according to data from the ETF Industry Association.
Maybe, just maybe, it's worth looking at some buy-on-the-dip emerging markets ETFs following the recent multi-day retrenchment. Consider the following five candidates.
iShares MSCI Taiwan Index Fund (NYSE: EWT) Down 3.5% in the past five days, the iShares MSCI Taiwan Index Fund is still worth a look for conservative EM investors. Obviously, Taiwan is a China play, but to EWT's credit, it has sharply outperformed FXI this year and has a fair yield of 3.4%. Since VWO and EEM are heavily allocated to Taiwan, shareholders in those ETFs probably don't need to be involved with EWT. Another plus of EWT is that its beta is lower than FXI's or VWO's.
Market Vectors Russia ETF (NYSE: RSX) Weakness permeating the EM ETF complex and a big decline in oil prices slammed ETFs with heavy Russia exposure on Tuesday. Those are the valid reasons for RSX's decline, though many would argue Vladimir Putin's reelection as president was another negative catalyst. Maybe it was, but the market had to have seen that coming. Putin's reelection was the very definition of a "sure thing."
So why RSX? Why now? Well beyond oil, RSX has been the best performing of the major BRIC ETF quarter this year, outperforming EPI, EWZ and FXI. Not to mention's Russia sports a tempting valuation right now.
iShares MSCI Thailand Investable Market Index Fund (NYSE: THD) The iShares MSCI Thailand Investable Market Index Fund is down just 2% in the past five trading days. That may not be much of a pullback and THD's pullback opportunity may be limited to the ETF falling to $70.
Already up more than 15% year-to-date, THD could see a jolt if the central bank opts to lower interest rates that are considered high by some. Bigger things for THD may be in store in the second half of 2012. Former Thai Prime Minister Thaksin Shinawatra told Bloomberg yesterday "In the third quarter of this year the economy in Thailand will pick up due to money we put in for reconstruction and then by the end of the year they will do a lot more construction, not just the flood but infrastructure."
EGShares India Small Cap ETF (NYSE: SCIN) There are plenty of reasons to watch SCIN and looking at the ETF's ugly stats for the past week and month, it can be said the ETF is in the midst of pullback. It is, but for those that can stomach a possible decline to support at $14 from current levels, there is also potential upside to $17. Even $17 could fall later this year if the EM ETF rally really gains steam. Note someone is doing some buying in SCIN today. The ETF usually trades just over 20,000 shares, but has already eclipsed 137,000 shares as of 2PM New York time. iShares MSCI Turkey Investable Market Index Fund (NYSE: ) TUR has had its turkey cooked to the tune of over 3.5% over the past week, but that may be the buying opportunity late comers have been waiting for because TUR has been a stellar performer year-to-date. As ETFdb notes there are compelling fundamental reasons to consider TUR, such as an economy heavy on services industries.
That's not the norm in emerging markets and speaking of unusual there is volume. As in interesting and large increases in TUR's daily turnover in recent days. Hmmm...
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