Investors Throw (Good) Taper Tantrum for Asian Stocks

Last week the Federal Reserve decided to delay tapering its $85 billion monthly bond purchases. Were you impressed?

A snapshot of Wednesday's post-Fed trading action

Ben Bernanke certainly impressed the Wall Street crowd. Last Wednesday they pushed the Dow Jones up 147 points to 15,676. The S&P 500 also jumped, setting a new all-time high.

While that day's action focused on the Fed's $85 billion monthly bond purchases, Bernanke also reiterated they don't plan to raise short-term interest rates anytime soon.

In fact, the Federal Open Market Committee members said they expect to keep rates low until 2015 at the earliest.

Asian Moon Shot!

The follow-up action in Asian was even more important. Huge amounts of capital moved out of many emerging markets ahead of the Fed meeting.

The no-taper decision reversed the capital flight. Now money is moving back into emerging markets. Investors wasted no time, either.

Take a look at how the Vanguard Pacific ETF (VPL), which tracks this index, performed this week:

VPL rose 3.08% from its low to its high just on "No Taper" Wednesday!

Compare that to the day's action in some U.S.-traded Asian ETFs.

NOTE: I should disclose that my International ETF Trader subscribers currently own Korea and Vietnam and are up an impressive 22.22% so far in 2013, as of Friday's prices.

Here's the takeaway: On a day when the Dow rose 0.95%, even the worst-performing Asian market (Vietnam) almost doubled the Dow's return.

Others — like India, Thailand, the Philippines and Indonesia — were up 500%, 700% and almost 1,000% more than the Dow Jones Industrial Average.


Look, whenever an asset class outpaces the Dow Jones by almost 1,000% ... you'd better take notice!

Millions of Consumers — Ready to Buy!

Here's an emerging-market tip: Companies that cater to emerging-market consumers could do very well in this market.

The number of middle-class consumers in those countries is growing rapidly. They have money to spend on everything: cars, cell phones, restaurants, household appliances, you name it.

To follow this trend, watch the EGShares Emerging Markets Consumer (ECON). ECON has slaughtered the main emerging-markets benchmark since the ETF's September 2010 inception.

From then through the end of June, ECON gained 29.3% (total return) compared with a 2.5% loss in the MSCI Emerging Markets Index.

I'm not suggesting that you rush out and pour a bunch of money into the Indonesian stock market or emerging market consumer stocks. As always, timing is everything.

Still, the biggest winners of the Fed's non-taper decision are the emerging markets. I expect this trend to continue for a long, long time.

Best wishes,

P.S. James DiGeorgia has a long history of being on-the-money with big calls. He called $1,000 gold and $100 oil back in the early 2000s. Everyone said he was crazy, but the results speak for themselves.

Last week he called gold's up move, and those who heeded his warning had the chance to grab 67% gains in just 4 days. That was his sixth winning trade in the last month, bringing his cumulative gains to over 200% in the last month alone!

He's getting ready to release his next trade. But you won't be able to access it unless you first click here to watch this urgent investor presentation.

This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit

Posted 09-27-2013 5:50 PM by Tony Sagami
Filed under: , ,
Related Articles and Posts