Emerging Markets' Strong Pace

by Paul Goodwin on March 05, 2015

This is an excerpt from Cabot China & Emerging Markets Report, which seeks to capitalize on the big boom in China and other emerging market countries. Editor Paul Goodwin, Cabot’s international investing guru, provides your passport to profits.


The PowerShares Golden Dragon Halter USX China ETF (PGJ) began a correction on February 18 that looked like another pullback to the bottom of the ETF’s trading range. But this pullback dropped right through the bottom of that range, killing our buy signal. Now, however, PGJ has enjoyed a two-day rally, with today’s action strong enough to kick it back on top of its rising 50-day moving average. So, technically, we have a new buy signal.

But this signal, while welcome, is as fragile as a March snowman. Today’s changes in the portfolio aren’t really due to this buy signal. We’ll see what the coming weeks have to say.

The big news in emerging markets is the diverging estimates of the growth of the Chinese economy versus the growth of India’s. The market seemed to handle the reduction of China’s annual estimate GDP growth to 7.0% pretty well. And the news of India’s official growth estimated rising to above 8% didn’t kick off a buying spree in Indian ADRs. Probably the top takeaway from both estimates is that growth in the healthiest emerging markets will continue to outpace the strongest developed markets by a wide margin.

A researcher and writer for over 30 years, Paul Goodwin has been a member of the Cabot investment team and chief analyst of Cabot China & Emerging Markets Report since 2005.

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