Tags: Emerging Markets | Bearish Outlook | US Stocks | Investors

Emerging Markets Breakdown Confirms Bearish Outlook for US Stocks

Emerging Markets Breakdown Confirms Bearish Outlook for US Stocks
(Dollar Photo Club)

By    |   Friday, 18 September 2015 09:37 AM

From a technical perspective, emerging markets are in a bear market after falling more than 30 percent in the past year. This is measured with iShares MSCI Emerging Markets ETF which offers a convenient benchmark for emerging markets. This ETF trades under the symbol EEM.

More than 20 percent of this ETF’s assets are invested in China. Fifteen percent of assets are in South Korea and Taiwan is the fund’s third largest holding with India and South Africa rounding out the top five. Smaller positions in Brazil, Mexico, Thailand and Poland show how diversified this ETF is.

Emerging market equities never fully recovered their bear market losses and EEM has not reached a new all-time high since October 2007. EEM has now been in a renewed downtrend since September 2014.

Emerging markets are in a bear market. Investors in the U.S. often use aggressive stock indexes to gauge the strength of the stock market. They believe growth stocks and other aggressive indexes lead markets both up and down. Investors are showing their comfort with the future when they buy aggressive stocks. When investors turn bearish, they turn away from aggressive stocks towards defensive sectors. Declines in more aggressive indexes are often the first sign of a bear market.

For international investors, emerging markets are the aggressive index.

With emerging markets under pressure, investors are demonstrating concern with the global economy. With no turnaround in sight for these emerging markets, it is likely developed markets will follow emerging markets lower.

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MichaelCarr
From a technical perspective, emerging markets are in a bear market after falling more than 30 percent in the past year.
Emerging Markets, Bearish Outlook, US Stocks, Investors
249
2015-37-18
Friday, 18 September 2015 09:37 AM
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