Thanks to instability in China that led to repercussion of gloom and uncertainty regarding the timing of an interest rates hike, the global stock market saw a bloodbath in Q3. This is especially true as iShares MSCI ACWI ETF (ACWI – ETF report) targeting the global stock market tumbled over 9% in the three months through September. This represents the worst quarter since 2011 (see: all the World ETFs here).
The weakness in oil prices, and slowdown in emerging markets and other developed economies further added to the chaos. In fact, the global stocks wiped out nearly $11 trillion in value during the third quarter, according to Bloomberg, suggesting that the pain were felt across every corner of the globe.
Emerging markets were the hardest hit, followed by Asia Pacific and Japan. Meanwhile, European stocks suffered the worst performance since the Euro zone debt crisis in 2011 due to additional headwinds including the Volkswagen scandal, the ongoing Greece glitches and the immigration crisis (read: ETFs to Watch as Emerging Market Asset Outflow Doubles).
However, the negative sentiments seem to be reversing with the start of the fourth quarter as global stocks have shown an impressive comeback in the wake of fresh signs of monetary easing speculation. In particular, slowing growth in China, Japan, Germany and the U.K. have spurred the stimulus bets while the weak U.S. job reports signaled that the era of loose money policy, which has long been supporting the rally in the stock market, would in place for longer than expected.
Further, the latest Fed minutes from the September FOMC meeting pushed back the chances of the rates hike to early next year. Oil price has also regained momentum and has been trending higher on improving demand/supply dynamics, resulting in a global energy sector rally. All these moves have injected fresh optimism into the global stock market at least for the near term and renewed the appeal for the riskier assets. As a result, the global stocks are on track to post their biggest weekly rise in four years (read: ETFs that Gained & Lost Post Dismal Job Data).
That being said, we have highlighted four nations and their ETFs that gained in double digits to start Q4 and are easily crushing the broad U.S. market returns. These could be strong momentum plays for investors heading into the final quarter of the year as well.
Indonesia – Market Vectors Indonesia ETF ((IDX – ETF report))
This ETF follows the Market Vectors Indonesia Index, holding a basket of about 48 companies that are based on or do most of their business in this Southeast Asian nation. The product puts about 53.2% of total assets in the top 10 holdings, suggesting moderate concentration. Large caps are pretty prevalent, as these make up for 76% of assets, leaving little allocation for mid- and small-cap stocks.
With respect to sector holdings, financials takes the largest share at 33.5%, followed by consumer staples (17.8%) and consumer discretionary (13.8%). The product has amassed $87 million in its asset base while trades in moderate volume of around 82,000 shares. It charges 58 bps in fees per year from investors. The fund surged about 19% since the start of Q4 and has a Zacks ETF Rank of 3 or ‘Hold' rating with a High risk outlook.
Canada – IQ Canada Small Cap ETF ((CNDA – ETF report))
