Global markets continued their pullback this past week, with jitters about Europe’s debt problems and Korean tensions dominating headlines. As a result, you were stopped out of the iShares MSCI Turkey Invest Mkt Index (TUR) yesterday for a 12.13% gain, as this fast-growth market was unjustly lumped together with European economies that are peripheral to the continent’s so-called PIGS (Portugal, Ireland, Greece and Spain). We also stopped out of the Global X FTSE Nordic 30 ETF (GXF) for a gain of 1.01%.
But the news isn’t all bad. For one thing, the recent pullback has not been nearly as severe as others in 2010. A surprising number of your positions ended the week higher, including the Market Vectors Brazil Small-Cap ETF (BRF), iShares MSCI Taiwan Index (EWT), iShares MSCI South Korea Index (EWY) and the Market Vectors Russia ETF (RSX).
That means the market is not as weak as the negative headlines would indicate. Yes, European positions like iShares MSCI Turkey Invest Mkt Index (TUR) have pulled back on the bad news from Ireland. But I expect that European authorities will throw everything they can at the Irish problem — even if $100 billion-plus bailout packages are just kicking the can down the road. These efforts will settle the markets eventually — if only until the next round of uncertainty.
From a technical standpoint, our overall investment strategy with respect to your current positions remains the same. If a position has fallen below its 50-day moving average, I am moving it to (or keeping it at) a HOLD. If a position hits its stop, I recommend that you exit the position — as you did with iShares MSCI Turkey Invest Mkt Index (TUR) this past week.
That said, I am keeping Turkey on our watch list and I expect to re-enter the position once it resumes its uptrend. Such is also the case with volatile Chinese solar play Jinko Solar (JKS), whose fundamentals remain strong, but it is a volatile stock in a volatile sector.
The bottom line? I expect 2010 to end on a high note and that you’ll see big gains in your Global Stock Investor portfolio in December.
Portfolio Update
Market Vectors Brazil Small-Cap ETF (BRF) rose 1.6% this past week. Still trading below its 50-day moving average, this bet on Brazil’s domestic economy remains a HOLD.
The WisdomTree Dreyfus Chinese Yuan Fund (CYB) fell slightly this week. The yuan exchange rate should continue to appreciate gradually. The yuan’s appreciation could help to curb China’s inflation and reduce costs for importers, Sheng Songcheng, head of the Shenyang branch of the People’s Bank of China, said this week. CYB is a HOLD.
iShares MSCI Malaysia Index (EWM) fell back slightly this week. Malaysia’s economy continues to be on a growth trajectory with a 5.3% Gross Domestic Product (GDP) expansion in the third quarter (Q3) of this year, compared with 8.9% in the second quarter. EWM is a HOLD.
iShares MSCI Taiwan Index (EWT) rose 1.44% as technology-dominated indexes continue to outperform on a global basis, even after Tuesday’s correction. Still securely in an uptrend, EWT remains a BUY.
iShares MSCI South Korea Index (EWY) rose just under 1% this past week, bouncing slightly from the sharp sell-off after North Korea’s shenanigans. EWY is a HOLD.
Freeport-McMoRan Copper & Gold, Inc. (FCX) climbed back over the $100 level on Monday, before selling off Tuesday. A bet on both copper and gold, FCX remains a BUY.
Claymore/BNY Mellon Frontier Markets (FRN) continued its correction this week, with Colombia, in particular, dragging frontier markets down. This position will bounce sharply. But for now, FRN is a HOLD.
CurrencyShares Japanese Yen Trust (FXY) ended the week slightly lower. Although calls for a drop in the price of the yen are growing louder, your bet on Japan’s currency remains a defensive HOLD.
Market Vectors Indonesia ETF (IDX) suffered the steepest drop in almost four months Tuesday as negative sentiment from Indonesia’s Asian peers and Europe continued to affect trading. Slicing through its 50-day moving average, IDX is now a HOLD.
Las Vegas Sands Corp. (LVS) ended the week down slightly, but is still well-entrenched in a strong uptrend. Your bet on “Asia’s Las Vegas” is still a BUY.
Market Vectors Russia ETF (RSX) rose 1.4% for the week and remains surprisingly robust. RSX remains a HOLD.
Vale S.A. (VALE) traded flat this week. The company will list its shares on the Hong Kong Stock Exchange on Dec. 8. Vale remains a HOLD.
P.S. If you want to keep up with my latest insights on developments in fast-paced global markets, you can now follow me on Twitter on @NickVardy or on my new blog, NickVardy.com.
