MCHI - EM Election Madness
2024-06-04 15:40:00 ET
Summary
- Equities here in the US have gotten off to a weak start this month, with the S&P 500 down modestly over the past couple of sessions.
- The US-traded ETF that tracks Mexican stocks is down 8.3% month-to-date and 12.3% year-to-date.
- Averaging across countries, EMs have fallen 0.74% year-to-date, whereas developed markets are up mid-single digits on average.
Equities here in the US have gotten off to a weak start this month, with the S&P 500 (SPY) down modestly over the past couple of sessions. However, those declines are being overshadowed by emerging markets. Mexican equities have gotten massacred following the country's election of Claudia Sheinbaum as president. The US-traded ETF that tracks Mexican stocks ( EWW ) is down 8.3% month-to-date and 12.3% year-to-date. After that decline, the ETF closed yesterday at a record 4.19 standard deviations below its 50-day moving average (DMA). That recent weakness is also a 180 from last year, when EWW was the best-performing country ETF of the 22 tracked in our Global Macro Dashboard. Turning forward to today's news, Indian equities are likewise responding negatively to an election. Prime Minister Narendra Modi's Bharatiya Janata Party ((BJP)) and its allies won a majority, but by a much smaller margin than was expected just yesterday. Given the results, the India ETF (INDA) is down 6.6% for its worst day since the final day of 2021. Unlike EWW, INDA is still up on the year, though it has swung from deeply overbought to oversold territory in only a day. As for the rest of the world, we would note that yet another emerging market has fallen on hard times. Brazil ((EWZ)) has gotten crushed this year with a 16.7% year-to-date decline, even outpacing Mexico for the worst performance in 2024. Averaging across countries, EMs have fallen 0.74% year-to-date, whereas developed markets are up mid-single digits on average. Relative to prior highs, the gap between emerging and developed markets is even more stark. EM country ETFs currently sit an average of 9.42% below 52-week highs, compared to only 3.28% for developed market countries....
EM Election Madness