October 15, 2013 at 16:01 PM EDT
Why The Trend Is Shifting Towards Emerging Markets
NYSEARCA:VWO, NYSEARCA:EEM Related posts: Emerging Global Advisors Launches the First Emerging Markets Dividend Growth ETF (EMDG) S&P 500 Index: Longer Trend Weakening, Daily Trend Turning Why Investors Should Consider Emerging Markets Why I’m Still Positive On This Emerging Markets ETF What Key Emerging Markets Are Saying About The Global Economy Now

buck the trendDouglas Davenport: In the first half of the year, America was on a roll. Until August, U.S. equities handily outperformed global markets, as money flooded in from around the world.

The U.S. showed particular strength against the emerging markets. Fears about a slowdown in global growth and expectations of higher U.S. interest rates prompted investors to invest in the country considered the safest of safe havens. As a result, the iShares MSCI Emerging Markets ETF (NYSEARCA:EEM) fell to its lowest level relative to the S&P 500 since the financial crisis.

But over the past couple of months, that trend seems to have changed. As you can see from the chart below, the S&P 500′s outperformance versus emerging markets peaked during the summer and has begun to fall.


Click for larger version

Why the Trend Is Shifting

Part of the reason for this reversal is improving sentiment toward the emerging markets as the economic picture in Europe brightens. But the other half of the equation is the damage done to the United States’ reputation around the world. International investors can no longer ignore our dysfunctional political system. And the longer the government remains closed, the lower the world’s opinion of us is going to sink.

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Related posts:

  1. Emerging Global Advisors Launches the First Emerging Markets Dividend Growth ETF (EMDG)
  2. S&P 500 Index: Longer Trend Weakening, Daily Trend Turning
  3. Why Investors Should Consider Emerging Markets
  4. Why I’m Still Positive On This Emerging Markets ETF
  5. What Key Emerging Markets Are Saying About The Global Economy Now

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