Zacks Analyst Blog Highlights EEM, CEW, TUR, FLZA and BNO

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Chicago, IL – June 29, 2022 – Zacks.com announces the list of stocks featured in the analyst blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Stocks recently featured in the blog include: iShares MSCI Emerging Markets ETF EEM, WisdomTree Emerging Currency Strategy Fund CEW, iShares MSCI Turkey ETF TUR, Franklin FTSE South Africa ETF FLZA and Brent raw ETF BNO

Here are the highlights from Tuesday’s analyst blog:

Emerging market ETFs that outperformed the S&P 500 in 1H22

The year so far has been overtaken by strong inflationary pressure across the world due to supply chain issues, the Russian-Ukrainian war, high energy prices, a super cycle commodity prices, a super hawkish Fed, rising rates across the world as central banks tightened policies to contain inflation, risky trade sentiments and a global stock market crash. The S&P 500 is down 17.9% so far this year (as of June 24, 2022).

The S&P 500 and Nasdaq entered correction territory this year as recession fears erupted. The Fed started rate hikes this year and had embraced a 150 basis point hike so far this year, which actually sparked fears of recession. iShares MSCI Emerging Markets ETFs is down 16.8%.

Broader emerging markets were badly hit, mainly due to weakness in Chinese equities. Chinese ETFs were hit hard earlier in the year due to stringent regulatory scrutiny as well as stringent COVID and resulting lockdown control measures. Chinese tech stocks began rebounding from late April as the country’s top political leaders planned on Friday to boost economic stimulus to promote growth. There could also be an easing of the continued crackdown on tech companies.

A stronger greenback also hurt emerging market ETFs. Most emerging market currencies fell to multi-year lows against the greenback. The strong dollar has also tightened the ability of emerging markets to obtain credit.

From now on, developing or emerging countries must tighten their monetary policies to counter the declines in their own currencies. Otherwise, it would increase inflation in emerging markets and increase the cost of servicing dollar-denominated debt. The appreciation of the dollar pushed an index of emerging currencies to an 18-month low, according to Reuters. WisdomTree Emerging Currency Strategy Fund is down 3.5%.

Against this backdrop, below are some emerging ETFs that have outperformed the S&P 500 as well as the broader emerging markets ETF this year.

Focus on ETFs

iShares MSCI Turkey ETF – Up 5.9%

ETF Franklin FTSE South Africa – Down 6%

How did they come together?

Countries like Saudi Arabia, Qatar and Nigeria are rich in oil. These countries are oil exporters and have therefore benefited greatly from a massive oil rally this year. Raw Brent ETF is up 56% this year. There are some exceptions like Turkey. Borsa Istanbul’s BIST 100 index hit its highest level this year since data first became available in 1988, according to data from Investing.com, as quoted on al-monitor.com.

The Central Bank of Turkey has paused its easing cycle lately and left the key repo rate at a stable week at 14%. Such a high rate probably worked in favor of its financial companies. Meanwhile, South Africa also fared better than other countries. The country is rich in metals. A rally in commodities has likely put South Africa in a better position.

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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for more information on the performance figures displayed in this press release.

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iShares MSCI Emerging Markets ETF (EEM): ETF Research Reports

United States Brent Oil ETF (BNO): ETF Research Reports

iShares MSCI Turkey ETF (TUR): ETF Research Reports

WisdomTree Emerging Currency Strategy ETF (CEW): ETF Research Reports

ETF Franklin FTSE South Africa (FLZA): ETF Research Reports

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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