Emerging Markets Update

by Paul Goodwin on July 24, 2014

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.

With most major indexes at all-time highs, it's hard to say anything bad about the broad market. Investors have gotten used to the crises in Iraq, Ukraine and Israel/Palestine, at least until the next big story. Our stocks have also been acting well, with a few of our Chinese holdings among the strongest in the market. And even those that aren't tearing it up are holding up well as we wait for earnings season to work its way through. Investors are showing an increased appetite for stocks outside China as well, which is a positive sign.

Be sure to keep an eye on Baidu's earnings report tonight. We know the results will be strong, but there's no telling whether or not they will top analysts' expectations. So be prepared to bail if you have bought recently and have only a small (or no) profit cushion. Other than that, things look good.

Several sources have reported that Alibaba has delayed its much-anticipated U.S. IPO until after Labor Day (September 1). Explanations vary, but the most common theories are that 1) the company wants to avoid the August market doldrums that occurs when many money managers go on their late-summer vacations or 2) the company doesn't want to have to rush to complete its pre-offering work. It now looks likely that Alibaba will put off its road show presentations (which require SEC approval) until late August or early September.

The Cabot Emerging Markets Timer has a healthy buy signal, as the PowerShares Golden Dragon Halter USX China ETF (which has completely erased its painful July 7-8 correction) is firmly above its 25- and 50-day moving averages.

U.S. markets shifted in and out of positive territory today, but were very narrowly mixed at the closing bell. At the close, the S&P 500 was up 1 point (0.05%), the Dow was down 3 points (0.02%) and the Nasdaq fell 1.6 points (0.04%). The PowerShares Golden Dragon Halter USX China ETF (PGJ) finished down 0.02 points (0.06%) to finish at 31.33.

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