Market Overview

CAPPT: There's Something to This New EM Acronym (THD, ECH, EPU)


On Monday, we introduced the world to the latest emerging markets acronym. That being CAPPT for Chile, Argentina, Peru, the Philippines and Thailand.

Well, we've got to admit that CAPPT hasn't taken off yet. No one has made any CAPPT t-shirts. No so-called experts have been spotted mentioning it on CNBC or in the Wall Street Journal. Oh well, the burden of being first to a party is often, well, burdensome.

See, the thing about CAPPT is that it's NOT just a cute acronym. We weren't sitting around playing the world jumble in the local newspaper, hoping for inspiration for something like CAPPT. Nor was validation of the efficacy of the CAPPT investment thesis necessary, but some arrived yesterday.

The fine folks at Bespoke Investment Group published a list of country stock market performances on a year-to-date basis. Three of CAPPT's five constituents are found among the top-14 markets. That's 60% for the math wizards out there and we did NOT have the Bespoke data on Monday.

Based on the Bespoke data, Peru is the top CAPPT performer thus far in 2012. Thailand is next, followed by the Philippines. Chile, the "C" in CAPPT, is found in the number 25 spot. That's not too shabby. Eighty percent of CAPPT found among the top-25 stock markets through the first three months of 2012. Argentina is the laggard in the 33rd spot, but the country's benchmark index is still up more than 7% this year, good enough to put the frontier market ahead of Sweden, France and Australia, just to name a few.

Looking at what the CAPPT ETFs have offered investors year-to-date, we'll admit the Global X FTSE Argentina 20 ETF (NYSE: ARGT) is up less than 1% on the year. The iShares MSCI All Peru Capped Index Fund (NYSE: EPU) has performed in line with Peru's benchmark index as both were up just under 20% on the year as of the start of trading today.

With a year-to-date gain of over 18%, the iShares MSCI Chile Investable Market Index Fund (NYSE: ECH) has sharply outperformed the IGPA, Chile's major index. What about the iShares MSCI Thailand Investable Market Index Fund (NYSE: THD) and the iShares Philippines Investable Market Index Fund (NYSE: EPHE)? Those are two ETFs that know no bounds as both are up more than 21% year-to-date. In both cases, the ETFs are outperforming the benchmark indexes in the Philippines and Thailand.

Don't worry. There's still time to hop on the CAPPT bandwagon.


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