We’ve been discussing the outperformance of Emerging Markets and since late October we’ve seen a massive rally in Equities around the globe.
Today we’re taking a look at the indexes that help make up the majority of the Emerging Markets Index for context on their recent moves.
First, we’ve got Taiwan, South Korea, and India all pushing to new all-time highs and trading in clear uptrends. These are areas we want to continue viewing any weakness as a buying opportunity.
Click on the chart to enlarge view.
Meanwhile, Hong Kong stocks had been a major laggard, but are now resolving their consolidation to the upside and reclaiming support. We’re seeing this type of action in a lot of formerly weak global market indices like Mexico, which is again a testament to the strength of demand for Equities.
But the box we’ve highlighted in red is the Shanghai Composite, which acted strong out of the gate but continues to consolidate sideways. Out of the largest Emerging Market components, it’s the only country to not make new recovery highs yet.
Seeing a leader turn into a laggard is a bit concerning, but as long as prices are consolidating sideways and not resolving lower then this chart is still more positive than negative.
Overall, the picture for Emerging Market stocks remains strong given the bullish absolute trends in the largest countries. As we stated, demand for Equities has been strong over the last three weeks with many indices up 10-15-20%+, which is not sustainable in the very near-term.
With that said, we still need to be viewing pullbacks as buying opportunities as opposed to reasons to panic. As the indices begin to consolidate, we’ll take a look at the individual stock level to identify fresh opportunities that are developing as areas like Autos and Realty break out.
As always, thanks for reading and please let us know if you have any questions!