August 2019 International Report

The Global X International Report can be viewed here. The report summarizes market and macroeconomic developments across our broad International Access Suite. For a closer look at China Sectors, see the latest Q2 China Sector Report.

2019 has been volatile, with trade tensions rocking markets and sending ripples across global markets. While the US has been preoccupied with fed dovishness and an inverted yield curve, its impacted global investors with rate cut spillover effects felt across emerging and developed markets alike.

However, this year has been especially strong for Frontier Markets (FM), which have outperformed broad Emerging Markets (EM) using both risk and return metrics of the Global X MSCI Emerging & Frontier Market ETF (EMFM), but still underperformed the MSCI All Country World Index (ACWI) given the sensitivity these countries have on trade and the diminishing effect trade tensions have on their terms of trade.

Best Performers

While the Global X MSCI Greece ETF (GREK) and Global X MSCI Colombia ETF (GXG) have year to date (YTD) outperformed the MSCI All Country World (ACWI) and MSCI Emerging Markets (EM) Indexes, only the Global X FTSE Nordic Region ETF (GXF) and Global X MSCI Portugal ETF (PGAL) have had positive returns YTD with lower volatility than broad EM.

As we pointed out earlier this summer, Greece has been the best performing EM YTD after exiting an IMF bailout program last year and despite ongoing concerns about Brexit and a slowdown in Europe. Its emergence from crisis has prompted a renewed interested in, and a solid foundation for, Greece’s potential long-term growth story.

In Europe, the Global X MSCI Portugal ETF (PGAL) has modest positive returns YTD, driven by an overweight in defensive Utilities and Consumer Staples relative to broader EM, but constrained by a slowdown in Europe and an underweight in Consumer Discretionary and Info Tech names.

GXG has outperformed many of its EM and ACWI peers in addition to the broader indexes owing to strong economic foundations in Colombia. Although its oil exposure has made volatility YTD higher for GXG, it benefitted from an overweight compared to broad EM in the positively performing Financials, Utilities, Consumer Staples, Energy sectors. Likewise, GXG also benefitted from being underweight Materials, Health Care, and Industrials while Colombia continues to implement gradualist market and policy reform.

Market Surprises

One fund that was performing well earlier this year was the Global X MSCI Argentina ETF (ARGT), which prior to August 9th returned 41.54% YTD (NAV). However, following a market sell-off prompted by the August 8th presidential primary elections in which the incumbent and market favorite (current President Mauricio Macri) lost, ARGT slipped substantially. While it has still outperformed broad EM YTD, the sell-off caused volatility to spike. (To read more about Argentina, check out our recent Post-Primaries Q3 Update.)

Worst Performers

YTD, Global X MSCI Nigeria ETF (NGE) and Global X MSCI Pakistan ETF (PAK) have been the worst performing single-countries in our International Access Suite but have gained attention for their attractive valuations. Broadly speaking, falling oil prices and output have weakened NGE while increased lending by Financials in Africa’s largest economy have weakened the country’s monetary policy maneuverability and exchange rate controls. Indo-Pakistan relations suffered following elections earlier this year. And while NGE’s valuations make it the cheapest ETF by price-to-earnings (P/E) ratio according to, PAK’s low valuations make it into the top 4.1

According to, the P/E ratio “measures the price of a stock divided by its earnings per share (in the case of the S&P 500, the “price” is the index level). It’s a measure of how much investors are willing to pay for each dollar of corporate earnings. The higher the ratio, the more “expensive” stocks are (and vice versa).”

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