Stock Market News & Stocks to Watch from StraightStocks » Emerging Markets

ProShares Expands Foreign Leverage With New ETFs

IndexUniverse Staff — Thu, 04 Jun 2009 19:52:57 +0000

New ProShares ETFs aim to provide 200% leverage to four key international markets.

If you think international markets are on the verge of a new leg up in the ongoing broad global rally, a few more tools via exchange-traded funds are now available to provide more leverage.

ProShares launched on Wednesday four ETFs taking 200% positions in four popular foreign indexes. Two are broad in geographic reach and each adds to existing ProShares ETFs that take inverse positions with the same benchmarks.

The new ProShares are the:

ProShares Ultra MSCI EAFE (NYSE Arca: EFO)

ProShares Ultra MSCI Emerging Markets (NYSE Arca: EET)

ProShares Ultra FTSE/Xinhua China 25 (NYSE Arca: XPP)

ProShares Ultra MSCI Japan (NYSE Arca: EZJ)

These ETFs each seek to capture 2 times the daily performance of their underlying benchmarks. That's something to consider since rival Direxion recently moved to introduce a series of leveraged ETFs that track monthly index performances. (See related article here.)

In theory, being able to track a longer return period should make the new Direxion ETFs better-suited for longer investing periods. That assumes, of course, investors hold the proposed ETFs at the beginning—rather than later—in any given month.

Two of the proposed Direxion leveraged ETFs tracking monthly performance would follow the same indexes as the new EFO and EET.

But leverage on a monthly performance basis has yet to come out. In the meantime, ProShares clearly has first-mover status in the international inverse ETF marketplace. Rydex still doesn't have any ETFs that leverage foreign markets. Direxion has two such funds, the Daily Developed Markets Bull 3x Shares ETF (NYSE: DZK) and the Daily Emerging Markets Bull 3x Shares ETF (NYSE: EDC). As their names imply, each ETF aims at 300% of the daily returns of their respective MSCI benchmarks.

The other ways to use leverage now available overseas is all through ProShares ETFs at the moment. But stay tuned ...

Another Look at Emerging Markets

Contrarian Profits — Thu, 19 Feb 2009 19:41:54 +0000

p class="MsoNormal"After passing much of 2008 standing thankfully on the sidelines, we believe that with current valuations, opportunities have returned for putting capital back into long-term positions in emerging markets. /p p class="MsoNormal"In fact, we believe that emerging markets will recover faster and outperform developed markets over the long term./p p class="MsoNormal"In our December 2007 edition of emWithout Borders /emwe wrote:/p p class="MsoNormal" style="margin-left: 0.5in;"“So much money has been sloshing around the globe in search of an #8220;above average#8221; return that even risky assets have been bid up tremendously. At this stage, however, with new holes in the financial dike showing themselves almost weekly – more holes, we suspect, than officialdom has fingers – the money flows are building toward a reversal. This will hammer the emerging markets the#8230;/p

Another Look at Emerging Markets

The Gold Report — Tue, 17 Feb 2009 22:20:34 +0000

Source: Casey Research 02/16/2009 After passing much of 2008 standing thankfully on the sidelines, we believe that with current valuations, opportunities have returned for putting capital back into long-term positions in emerging markets. In fact, we believe that emerging markets will recover faster and outperform developed markets over the long term. In our December 2007 edition of Without [...]

China-Chavez Oil Deal Shows Just How Weak America Is

Contrarian Profits — Wed, 24 Sep 2008 17:01:23 +0000

If you need more proof that the US lost the Cold War to Russia and China you need look no further than Venezuela, says emerging markets expert Irwin Greenstein, writing for Contrarian Profit. Hugo Chavez, president of Venezuela, inked two significant energy deals with China and Russia that will divert American [...]

4 Real Assets Set to Profit from the Death of the Dollar

Contrarian Profits — Mon, 22 Sep 2008 18:25:33 +0000

The headlines are dramatic. Short selling banned for 799 financial institutions. $50bn injected into money markets. Plans for a massive bailout fund to clear the system of bad debt and stabilize the housing market. The Unholy trinity – the Federal Reserve, SEC and Treasury – has pulled out all the stops this time. But while US [...]

When Markets Stabilize Russia Is a Better Bet Than US

Contrarian Profits — Sun, 21 Sep 2008 04:16:41 +0000

The news that Washington is fast becoming the world’s biggest slumlord through the buyout of distressed mortgages helped send international markets skyward. The biggest gains were in Russian stocks. And this could be the situation for quite some time, says emerging markets expert Irwin Greenstein, writing for Contrarian Profits. The irony, of course, is [...]

Why Patriotism and Your Portfilio Don’t Mix

Contrarian Profits — Sun, 21 Sep 2008 03:44:21 +0000

The ugly truth can sometimes yield beautiful profits, says Irwin Greenstein, writing for Contrarian Profits. But the truth exposed by the US government’s recent round of Wall Street bailouts is that the US actually lost the Cold War in terms of its free-market philosophy. Investors should adjust their portfolios accordingly… For a [...]

Collection of Global Economic and Emerging Market Blogs

Jonathan O'Shaughnessy — Thu, 10 Jul 2008 00:12:50 +0000

Hello all, Things are progressing here at Emerginvest quite well, but this week has been mostly development on behind-the-scenes code, so there isn’t too much too report. Aside from that, we know that you, our users, enjoy our site for one reason: a shared passion for global financial trends and emerging markets. In light of that, [...]

Merrill Lynch: Emerging Market Infrastructure Spending Will Surge 80% in the Next Three Years

Money Morning — Tue, 08 Jul 2008 22:02:13 +0000

By Jason Simpkins Associate Editor Merrill Lynch & Co. Inc. (MER) has raised its annual infrastructure-spending estimate for emerging markets by 80%, as developing countries try to keep pace... Money Morning is here to help investors profit han...

Emerging & Developed Mkts Country Weights

Richard Shaw — Wed, 25 Jun 2008 21:34:00 +0000

Knowledge of the country weights in the emerging and developed markets indices can be helpful in specifying allocations within the equity portion of a portfolio. For those clients who wish to allocate primarily on a country basis (as opposed to a sector basis, for example), our general philosophy is to begin the design process from the [...]

China, Brazil, India growin millionaires

Tony Sagami — Tue, 24 Jun 2008 21:53:30 +0000

According to a new study from Merrill Lynch, there are 6% more millionaires today than there were a year ago. And the China, India, and Brazil had the sharpest increase in new millionaires.

The number of millionaires increased by 22.7% in India last year, 20.3 % in China, and 19.1% in Brazil.

The study also found that 103,320 had a net worth of $30 million or more , an 8.8% increase.

"This year's report found that the number of high net worth individuals and the amount of wealth they control, continued to increase in 2007, with the greatest wealth being created in the emerging markets of India, China and Brazil."

Foreign Stocks; Deteriorated Environment?

Roger Nusbaum — Mon, 23 Jun 2008 12:20:00 +0000

There was an article in the NY Times Sunday titles "For Foreign Stocks, The Sure Bet Is Over." As is often the case the headline writer sensationalized the article a tad but there are some important things to think about if you are one to invest in foreign equities one way or another.

A few years ago there were some especially cheap areas in foreign and emerging and many of those areas are no longer cheap. I saw elsewhere that Petrobras (PBR) used to trade with a mid single digit PE ratio, then a couple of years ago it had close to a US market multiple and now it's higher than the US market. This isn't necessarily a reason to buy or sell the name, if oil does go to $200 in short order, as some think, PBR is likely to go along regardless of the valuation.

PBR is an example for many emerging market stocks that are no where near as cheap as they used to be. This should not be a shock to anyone, in the last five years emerging markets, as measured by iShares Emerging Market (EEM), are up by 250% versus less than 50% for the S&P 500. The risk for emerging markets, obviously, is greater after a 250% run.

Zero exposure creates a very big bet but if you have any exposure now you are taking more risk than five years ago and so should you have more or less exposure than you did five years ago?

Developed Europe appears to be economically vulnerable, very vulnerable, these days. The housing problems in some places might be worse than in the US, the rolling over of some economic data from the continent seems worse than the US, many commentaries paint the UK as being in dire straits making the pound an obvious sell. One commentator very amusingly said if he could figure out how to do it he would sell the pound against the pound.

The Shanghai Composite, as most folks know, is down over 50% in nine months, generally worse than other Asian markets. Is China an outlier, in terms of magnitude, or a leader of sorts and so other big declines will soon follow?

In simple terms there are maybe two big macros out there right now. One is that there is a global slowdown occurring in many places that we can perhaps attribute to excesses galore and escalating inflation. The other macro is the commodity boom and whatever that will ultimately turn out to be. Sorting those out might mean some countries do poorly and some do well or maybe all countries buckle under the weight of inflation in certain prices and asset (house) deflation.

For purposes of this post I am not trying quantify or give an opinion on what these things will mean. These are some of the issues that world markets have to confront. While market always confront risks, foreign has been a one way trade that has offered fantastic outperformance. In that light a set back seems reasonable. That is not a call for US equities to do better than foreign but that save for several in their own world destinations, don't let global equity price declines catch you off guard.

Demand for stocks is unhealthy now and most people understand that. In this environment, while the risks for foreign are greater than the were the more important thing, in my opinion, is one way or another having taken some sort of defensive action in the portfolio be it more cash than normal, inverse ETFs, puts, whatever.

There are times to go along for the ride up (most of the time) and times where defense makes more sense. Defense has been the key for quite a few months now and could be for a while longer.

Why Emerging Markets Are So Volatile

Richard Shaw — Sun, 22 Jun 2008 15:38:43 +0000

We are sometimes asked why emerging markets are so much more volatile than developed markets. The answer is that, due to their relative size, money flows between them cause most of the volatility effect. Consider a real world situation that most of us have seen — a stream emptying in to a pond and another stream [...]

Log & Arithmetic Charts Tell Different Stories

Richard Shaw — Sun, 15 Jun 2008 22:51:34 +0000

Simple arithmetic charts are OK for short-term performance review, but can be misleading for long-term purposes. Semi-log charts are best for long-term perspective. Arithmetic charts space each Dollar move equally on the vertical Y-axis. Semi-log charts space each percentage move equally on the vertical Y-axis. Either method creates only minor differences for short-term [...]

But How Do You Hedge Against Commodities?

The Energy Report — Wed, 11 Jun 2008 02:44:25 +0000

Source: Mineweb.com 06/09/2008 Since the onset of the so-called supercycle, around early 2002, commodities have increasingly gained the reputation of being a hedge against everything – except, now, so it seems, commodities. In the past few days, crude oil prices have surged into unchartered territory, close to $140 per barrel, closer to an as-yet unknown “choke [...]

Fundamental analysis for CEE emerging markets.

Vlada Kynsky — Tue, 03 Jun 2008 13:52:00 +0000

Yesterday I posted about new ETF iShares MSCI Eastern Europe (IEER.L). Let's have a look to key fundamental indicators of countries included in the fund. Russian index RTX, Polish WIG, Hungarian BUX and Czech PX.

Country/Region	DivYld	P/B	P/CF	FY0 P/E	12M Trailing P/E	FY1 P/E
Russia	0.98	2.24	13.91	13.22	10.35	11.6
Poland	2.78	2.25	9.14	12.73	12.39	11.94
Hungary	2.6	2.37	6.4	10.23	9.83	9.36
Czech Republic	2.96	2.82	8.52	15.49	18.39	13.62

Central European countries provide high dividends. On average dividend yield in Emerging countries is 1.91. Also P/E ratios are better than average. Lower P/E valuation for Hungary is mainly influenced by low GDP growth which is already one year below 1%. Hungarian economic outlook is the worst in region. See below how these emerging markets stand vs global fundamental picture.

Country/Region	DivYld	P/B	P/CF	FY0 P/E	12M Trailing P/E	FY1 P/E
Global	2.5	2.19	8.74	14.8	15.4	13.69

Related tickers: (GUR), (CEE), (RSX), (GMM), (BIK),

Tim Seymour Recommends Investing in Brazil

CEO Blogger — Wed, 28 May 2008 23:31:16 +0000

Seymour talked about emerging markets and pointed to Brazil’s relatively low inflation (4.5%) and strong currency. Plus, the Brazilian economy is smoking hot right now, and consumers in the country are spending. Seymour recommended three stocks, including Unibanco, Perdigao, and Companhia Sanea. Track the performance of these stocks at: http://www.trackthepros.com/categories.php?category_id=161 Also, his 18 Global Trades recommended on 3/12 [...]

2 Emerging markets, 2 different stories.

Vlada Kynsky — Wed, 28 May 2008 17:53:00 +0000

With recent interest rate decisions I had closer look into 2 emerging markets in Central Europe. Hungary and Poland. Hungarian central bank again by 25bp (to 8,5%) to tighten monetary policy. Currently highest interest rates since January 2005. Bank acted mainly because of upward inflation. Its outlook has been raised from 3,6% to 4,2%.

Economic picture doesn't look very well. Retail sales down by -4% or construction down by -11%. Industrial output remains positive but with sharp decline to 4%. Numbers are year on year basis. GDP growth stays already one year below 1%. And with current high interest rates it's hard to see soon any revival.

Polish central bank left rates unchanged on 5,75%. The decision mainly taken by better than expected inflation reading (4%). Unemployment shows very positive trend and latest number is 7,7%. Retail sales up by +17,6. Industrial output up by +15%. Nevertheless GDP growth is expected to slow down from 7% to 5,5%, Poland still shows signs of healthy economy.

No recession for Europe.

Vlada Kynsky — Thu, 15 May 2008 19:40:00 +0000

Today released numbers show good shape for European economies. Germany more than doubled estimations and grew 1.5% in first three months of 2008 (quarter on quarter). Non-seasonally (quarterly basis) GDP grew 1,8%.
Another surprise is coming from France. Quarter on quarter growth by 0,6%. Great Britain up by 0,4%.Smaller European economies, Greece +1,1% and Austria +0,8%. But others shrank slightly. Portugal and Spain registered in the negative, -0,2% respectively -0,3%.

And how about Central European emerging markets. Czech Republic quarter on quarter +0,9% but non-seasonally still nice growth by 5,4%. Slovakia non-seasonally slow down from 14,3% to 8,7%.

Emerging markets vs. Developed markets.

Vlada Kynsky — Wed, 30 Apr 2008 18:14:00 +0000

Let's see quick comparison between emerging markets and developed economies. I used ETF as a tool. IShares MSCI EAFA (EFA) as a benchmark for international stocks from developed economies. And IShares MSCI E.M.I.F. (EEM) for emerging markets. You can see there is only slight difference in P/E valuation.

P/E ratio:
EFA 11,5
EEM 12,8

Someone can say EEM is not real ETF to measure emerging market performance. That's partially true. More than half (53%) holdings are listed on US markets as ADR. In addition to that big share is from already developed countries like South Korea, Taiwan.

The important thing is to compare EPS growth. From attached chart you can see that estimated earnings growth for 2008 is by 4,6 % faster than for EFA. Moreover both ETF are traded currently with premium against NAV. EFA -0,48% and EEM -0,70%.