The market has been trending downward for the past couple of weeks. The emerging markets in particular have taken a beating - many are at or below their 2006 lows from January. In this article, we will quickly look at the different emerging market ETFs and if they are a buy at the moment.
FXI - China 25 Index Fund. This is currently trading at a slight discount to the NAV.
PGJ - The other China Fund. We discussed the pros and cons of PGJ compared to FXI in previous articles. PGJ is selling at a lesser discount than FXI at the moment.
EWH - The hongkong index fund is selling at a discount to its NAV.
EEM - is trading at a discount to NAV as of 6/9/06.
VWO - is EEM's cousin with a slightly different asset mix, but is trading at a higher discount to NAV than EEM is.
EWZ - The Brazil index fund is selling at a slight discount to its NAV at the moment.
EZA - The South Africa Fund is trading at a discount of about 2% to its NAV.
EWY - The South Korea Fund is trading at a discount of about 1.4% to its NAV.
EWT - The Taiwan Index Fund is selling at a discount of about 1.8% to its NAV.
IFN - The India fund is trading at a 26% premium to its NAV and is clearly not a buy at the moment.
IIF - The other India fund is trading at a 6.4% premium to its NAV.
ILF - The Latin America 40 Index fund is trading at a slight discount (-0.5%) to its NAV.
To round up the foreign sector, we have two other funds EFA and EFV.
EFA - is selling at a discount of 0.71% to its NAV.
EFV - is selling at a lesser discount of 0.28% to its NAV.
Looking at the foreign indices, most of the indices are at their lowest points in 2006 or close to their 2006 low levels. Some indices are below their 2006 levels. The economic fundamentals are good in the emerging markets. I feel that the stocks will probably still go lower in the next few days.
I added to my positions in the emerging market segment as many indices dropped 25%-35% from their 2006 highs. The emerging markets will continue to do well. The fundamentals in these countries are solid. In the late nineties, there was the Asian currency crisis where many countries didnt have enough dollar reserves to handle the capital exodus. Many countries have large foreign currency reserves and their balance of payment situation is good. The growth rate in the emerging markets is likely be several points higher than the U.S market for the next several years.