Developing markets gave slack

In recent days, the shares of emerging markets have reversed, changing course and losing points, although earlier vigorous growth has turned some of these assets into the most profitable objects for investment this year.
ETF iShares MSCI Emerging Market (ticker EEM) sank 5.5% compared to November 22, when the fund completed trades at the best since 2011 levels. Following the results of the last 9 trading sessions on Wednesday, this ETF registered 7 closed downs, although in general this year it is still held in the green zone, demonstrating an increase of 30% against the growth of the S & P 500 by 18%. Analysts of Bespoke Investment Group researchers, commenting on the technical situation, suggest that “the long-term upward trend in EEM is now complete.” The MSCI Emerging Markets index, tracked by iShares ETF, is trading for the fifth time in a row under the 50-day moving average, which is the first steady decline of the indicator this technical level this year and traditionally indicates a pulse fading.
This dynamic is observed against the background of the recent weakening of the players’ interest in risk. So, on Wednesday, the S & P 500 index registered the longest decline since March. As some strategists believe, it is likely that the long-term rally in emerging markets, fueled by the pursuit of high yields at low rates, has already outlived its best days. In addition, recent economic indicators were weaker than forecasts. The Citi Economic Surprise Index, tracking emerging markets, has been falling over the past month, indicating that the data is less likely to differ from forecasts.
“Support factors for the assets of emerging economies are evident, but all good news has already been put in prices, and the most favorable period has already passed, so that 2018 may be more complicated than the consensus forecast implies,” analysts of Societe Generale commented in their forecast for new Year. However, emerging markets are known for their ability to recover quickly after attacks of weakness. Since rates are still low and investments in other regions of the world look expensive, a number of investors still do not want to leave the emerging markets, especially given that many developing economies, tracked by leading indices, continue to show decent figures.
“We believe that the economies of developing countries will outperform the developed countries in their results, which will support the assets of the developing market,” Goldman Sachs Asset Management experts write in their forecast for 2018, pointing out that developing economies are now at the earlier stages of the business cycle compared with developed economies

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