Four More Facts About EM ETFs You Need to Know Now


It was just a week ago that some stunning facts about the staggering declines suffered by emerging markets ETFs were examined.

Those not-so-fun facts included tidbits about the current decline being one of the worst multi-week stretches in the history of the iShares MSCI Philippines Index Fund (NYSE:EPHE).

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Others included the entry of the iShares MSCI All Peru Capped Index Fund (NYSE:EPU) into bear market territory and the impact wilting copper prices were having on the iShares MSCI Chile Investable Fund (NYSE:ECH).

The news for emerging markets ETFs has not gotten better over the past week. It has actually gotten worse. Here are some more alarming facts about emerging markets ETFs that just cannot be ignored.

Jaw-Dropping Outflows The Vanguard FTSE Emerging Markets ETF (NYSE:VWO) and the iShares MSCI Emerging Markets Index Fund (NYSE:EEM) have seen outflows of $657.1 million and $4.59 billion, according to Index Universe data.

Worse yet, those numbers are just the June numbers and do NOT reflect presumable outflows from Thursday's emerging markets carnage. Single-country ETFs are nothing to write home about in the outflows department, either. For example, the iShares FTSE China 25 Index Fund (NYSE:FXI) has lost over $361 million this month alone.

Speaking of China Chinese banks are not healthiest big banks on the block and spiking SHIBOR rates deftly paint that picture. Problem is Chinese banks are not just big parts of China ETFs.

Those institutions along with other emerging markets banks play prominent roles in funds such as EEM and VWO. Here's the breakdown. EEM has two Chinese banks among its top-10 holdings, a 17.5 percent overall weight to China and a 27.2 percent overall weight to financials. For VWO those numbers are two, 20 percent and about 20.5 percent.

Protests It is not just the price action in emerging markets ETFs that is getting worse, it is the various protests in these countries that are turning progressively more sour.

Add up protests in Brazil, Indonesia and Turkey with expected protests later this month in Egypt and ongoing labor unrest in South Africa and this is the result: Nearly 25 percent of EEM's country weights are currently home to civil unrest.

How Low? Some emerging markets ETFs are not just making multi-month or 52-week lows. These funds are making multi-year lows.

Here is a list of noteworthy offenders. The iShares MSCI Brazil Index Fund's (NYSE:EWZ) Thursday close was its lowest since April 2009. Thursday's close for the Market Vectors Brazil Small-Cap ETF (NYSE:BRF) was the lowest since July 2009.

The Market Vectors Egypt ETF (NYSE:EGPT) closed at $9.30, a closing price that was never seen even in the months following the 2011 Arab Spring. Thursday's close below $18 was the first for the Global X FTSE Colombia 20 ETF (NYSE: GXB) since December 2011.

The iShares MSCI South Africa Index Fund (NYSE:EZA) closed below $54 for the first time in nearly 40 months. If the Market Vectors Russia ETF (NYSE:RSX) closes below $24 on Friday, a legitimate possibility, it will be the first time that ETF has done so in 54 weeks.

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