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The anxiety over emerging-market stocks has subsided, and even Brazil?s election results are just a blip in the larger world of developing countries.
Seven days after climbing to a 16-month high, the Chicago Board Options Exchange Emerging Markets ETF Volatility Index, used to gauge investor trepidation, had its biggest weekly drop in almost three years. The gauge ran off eight consecutive days of declines, the longest streak on record.
Options sellers are charging less for protection against emerging-market stock losses even as Brazil?s benchmark equity index fell to a six-month low the day after Oct. 26?s election. With Europe at risk of deflation and U.S. investors facing the end of quantitative easing, developing countries from India to Mexico have outlined commitments to economic improvement. That?s making the panic subside, according to Mark Luschini of Janney Montgomery Scott LLC.
?The sense is that emerging markets have fewer economic headwinds right now than developed countries,? Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott, which oversees $67 billion, said in an Oct. 28 phone interview. ?People have gone long emerging-market equities. What?s happening in Brazil is idiosyncratic and not indicative of all emerging markets.?
Luschini currently owns emerging-market stocks from Mexico, Vietnam and China.
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