(SEMB) iShares JPMorgan USD Emerging Mkts

Emerging-market currencies and debt plunged to hit their weakest levels in months Monday, as the toxic combination of a U.S. credit ratings downgrade, the euro-zone sovereign debt crisis and worries about slowing global growth prompted a broad selloff in financial markets.

Currencies like the South African rand and Russian ruble fell more than 2.5% intraday against the dollar, largely in response to widespread risk aversion and a dive in commodity prices, while the spread on the benchmark emerging-market sovereign debt index reached its widest level in more than one year.

The risk premium on the J.P. Morgan Emerging Markets Bond Index Global, or Embig, widened by 28 basis points to 351 basis points over Treasurys, its widest level since July 2010. In price terms, its index fell 1.1%.

In a knee-jerk reaction to Standard & Poor's Friday downgrade to the U.S. credit rating, to double-A-plus from triple-A, global stocks suffered a broad selloff and commodities fell steeply Monday. Meanwhile, investors fear that the European Central Bank's purchases of Spanish and Italian debt, to protect the larger member nations from contagion risks, may not be enough to prevent a larger crisis down the road.

just thought I'd post an article on the topic:

http://www.ft.com/cms/s/0/c592e88a-301e-11df-8734-00144feabdc0.html

I am out of this holding since early morning today as we had a nice run after breaking out of the triangle as per my previous post and a nice push from gdp/usd fall. Although I don't necessarily think that gbp/usd can't go lower, I think for the last couple of weeks it has been a steep run so a pullback might be due soon. Looked like a good time to lock in some profits..

Looking for a pullback and a re-entry opportunity in the coming weeks/months if no nasty surprises emerge.

Ineterestingly enough, the chart once again is drawing up a funny picture. The last four or so peaks have hit the top of that trendline you could draw across them. Let's hope the trend direction stays the same.

Good luck if anyone's holding and going to read this.

Any views appreciated.

B

Hey, good to hear. As said before, I have bought in some time ago too for basically the same reasons. The yield was great when I was buying in and was bullish on the dollar - happy the way the dollar play has turned out. I am still willing to hold on to it for longer.

Also, the equity valuations do appear a little steep to me too, so a nice way to benefit from the growth story but not taking on as much risk. I think some of those countries in the fund have a much smaller chance of defaulting than the PIGS and still pay such a nice yield.

Don't know whether you're looking at technicals at all, but the picture is pretty interesting too. We had a breakout to the upside from the symmetric triangle and today cleared quite a significant resistance level at around 64 quid. I know this is not the most traded stock/fund but hopefully this does prove to be positive.

Good luck

I'm more than watching it - I'm holding it! I bought in to this as a cautious way into emerging markets (at least I hope it's cautious) as I'm not fully convinced by current equity valuations in these territories. My logic was that if I'm wrong about equity valuations then with any luck bond valuations will catch up, and if I'm right, then bonds are a safer place to be.

And yes, there's an additional currency risk involved because the fund operates in dollars, but on the other hand there's an attractive yield to compensate.

So far, so good!