iShares MSCI Emerging Markets ETF (EEM) powers above 6-year high

I choose to believe that this is a genuine breakout above 6-year high after the counter spends nearly three months above resistance zone.

There are over 800 component stocks in the MSCI Emerging Markets Index. These are stocks listed in over 20 countries. It has exposure to China, South Korea, Taiwan, India, South Africa and Brazil. There is also exposure to Russia, Turkey and Indonesia. 99% of it’s assets are non-US.

EEM monthly chart 2010 - present

EEM monthly chart 2010 – present

Although many emerging markets like China have a reputation of inflating their data (Chinese call it ‘注水’) that is not unfounded (see this example ‘辽宁内蒙古等多地自曝GDP“注水”:弄虚作假歪招多‘), I believe that their stock market gains represented by EEM is still a more virtuous kind than the likes of US which is probably driven by QE.

As a quick comparison,

  1. USA – QE
  2. USA – crumbling labour participation
  3. USA – over 20 trillion debt
  4. USA – leadership mired in politicking
  5. China – also economic stimulus but over 6% growth
  6. China – fast growing middle-class driving consumption
  7. China – huge infrastructure projects in the country and outside the country, BRI initiative to ‘unite’ the EurAsian landmass in a huge unprecedented bloc.
  8. China – united leadership

Just think about this: US population in 1990 was 250 million. It’s population was 325 million people in July last year but labour participation at moment is lower than 1990. How are people making a living now? How do they pay for their purchases?

One thing is clear: As long as EEM trades above the 6-year high, there is every chance to go higher. If there is cause for alarm, EEM will tell me by falling back below.

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