Helping Self-Directed Investors Succeed Blog - BRIC Economies Feeling the Heat as of May 10th, 2019

BRIC Economies Feeling the Heat as of May 10th, 2019

May 10th, 2019

This week President Trump went ahead with his proposal to increase tariffs on about $200B of imported Chinese products and investors gasped for breadth briefly but eventually recovered to gain some strength to bite into some more global equity purchases. The fear of a massive correction taking hold of markets hasn't crystallized so far into actuality. But, it may be early days yet.

At the end of this somewhat momentous week in recent times, the S&P 500 Tracking ETF - SPY is still sitting pretty with year-to-date price gain of +15.28%. The Tech Heavy NASAQ 100 Tracking ETF - QQQ is up +19.93%. The DJIA Tracking ETF - SPY is clearly lagging behind with a price gain of +11.46%.

Nevertheless, BRIC economies did clearly appear to feel the pressure of US policy action this week. A single ETF tracking the economies of Brazil, Russia, India and China - The Guggenheim BRIC ETF - EEB tumbled -5.18%. The iShares China Large Cap ETF - FXI swooned and dropped -6.55%. The iShares India NIFTY 50 ETF - INDY skid -5.23%. The Van Eck Russia ETF - RSX fell -2.92% and iShares Brazil ETF - EWZ lost -2.28%. While all these BRIC economies did shed a lot of percentage points this week, Russia and Brazil seem to have handled this US policy action a lot better than the other two economies.

India, the world's largest democracy by population, is in the middle of an important general elections phase where voters are trying to decide on the a party that will rule the nation for the next 5 years. This by itself has introduced some volatility to India specific ETFS which must not be ignored.

From a relative price change perspective over the last 13-week timeframe, interestingly, the INDY has held up better than the other three by a signficant margin with a price gain of +6.43% followed by RSX which is up +2.25%. FXI's price change for the same time period was -1.55% and EWZ's price change was -9.45%.

Self-directed investors will want to keep a close eye on these above referenced ETFS over the coming months to see how investors will react to the next moves from the US Government on policy actions concerning Trade and Tariff.

Good Luck and Happy Investing!

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