Emerging Markets Breakout

I have been tracking the progress of European equities over the course of 2018, looking for a breakout to new all time highs to take a position in the Active Asset Allocator. So far, European equities have failed to punch through overhead resistance. The same cannot be said for Emerging markets, however. The iShares MSCI Emerging Markets ETF broke out to new all-time highs earlier this year, quite a bullish development. So far, this resistance zone has now become a key support level for the region. Emerging market equities tend to trade inversely to the US dollar, so the recent spike in USD has led to the short-term correction in EEM.

 
 

You will know that my long-term view on USD is bearish, so a structurally weak dollar could provide quite a tailwind for EEM in the years ahead. China accounts for 33% of EEM and the ETF also has a large overweight position in the technology sector, which explains its strong performance in recent years. EEM is  expensive for an index-tracking fund at 0.65% AMC, which is a drawback, but a sector making new all-time highs can only be viewed as bullish. 

 

At Secure Investments, I advise individual clients on their pension and non-pension fund investment portfolios. To learn more about my Active Asset Allocator and Gold Trader  investment strategies, please get in touch at brian@secureinvestments.ie or 086 821 5911. If you are reading this via LinkedIn, why not visit Secure Investments and subscribe to get exclusive content for free. No spam, ever. Just great stuff.

Disclaimer

The information contained herein should not be taken as an offer of investment advice or encourage the purchase or sale of of any particular security or investment. It is provided for information purposes only. Secure Investments and its content providers makes no representation or warranty of any kind with respect to the services described, analysis or information obtained arising from use of the pages on this website. Information provided is obtained from sources deemed to be reliable and is provided solely on a best efforts basis. Secure Investments and its content providers do not guarantee the completeness or accuracy of such information and do not accept any liability for any loss or damage arising out of negligence or otherwise as a result of use or reliance on this information, whether authorised or not. The use of the website is at the user's sole risk. Not all recommendations are necessarily suitable for all investors and investment policy must be tailored to suit the circumstances of the individual. We recommend that readers consult their professional adviser before acting on any advice or recommendation on this website. The value of any investment may fall as well as rise and you may not recover the full amount originally invested. Past performance or simulated performance is no guarantee of future investment returns. The value of your investment may be subject to exchange rate fluctuations which may have a positive or adverse effect on the price or income or the securities.