This Week in Emerging Market Volatility – 11/1/2013

If you have an interest in the emerging market space you should definitely pick up a copy of this weekend’s Barron’s.   The cover has four experts on the Latin American markets pictured and on the inside they discuss their outlook for the region over the next few years.  It is mentioned that Latin American stocks are down 20% over the last 18 months.  However, there has been a turn.  For instance the iShares MSCI Brazil Capped ETF (EWZ – 49.62) is up a tad over 20% from the lows this summer.  However it is still 10% lower on the year.   VXEWZ did rise last week and the near month futures did as well.  This was based on a drop of just over 1% for EWZ.

The iShares Emerging Markets ETF (EEM – 42.47) gives investors exposure to markets all over the world, but does have a Latin American component to it.  EEM is 17% higher than the low put in this summer and also slightly down for the year.  It dropped last week and VXEEM responded by gaining over 3%.

Despite the rebound for both EEM and EWZ over the past few months their respective volatility indexes are at a relatively high premium compared to VIX.  These elevated levels give a bit of a cautious signal about jumping into emerging markets over the near term.

VXEEM VXEWZ