Trading Ideas

Emerging Markets and my preferred #ETF Entry

Emerging Markets and my preferred #ETF Entry by SchalkLouw on

Let’s start off with the declaimer – I’m South African and I might just be bias. If you would ask me to buy one #ETF and one ONLY, this will be my recovery ETF . Is it still a country full of challenges? YES! Could it face further downgrades? MAYBE! Do South Africa know how to fix the problem and have the “management” to do it? YES!

Watch $55.30 as a first possible breakout point, with the $58.40 being next resistance level . 50-day Moving Average also getting mighty close to the 200-day, with a break bring that Golden Cross.

Fundamentally, according to Thomson Reuters consensus forecasts, analysts see growth of 17.1% from current levels on the FTSE/JSE Top40 Index (in locally currency). My personal view is that the Rand/USD should be better priced around the R12.78/USD over the next 12 months. Should that happen, we could be looking at a possible capital gain of 8.32% (in USD) on the $EZA, corresponding nicely with the close to $58.40 levels. Should the $ZAR only improve to R13.50/USD (and consensus are spot-on), then we could be looking at a target price of $60.85 over the next 12 months.

On the downside, watch $53.08 as first resistance point, with $51.50 as next possible stop.

Schalk Louw
As Portfolio Manager at PSG Wealth Old Oak and with over 20 years’ experience in the investment industry, Schalk has consistently delivered solid returns to his clients and has certainly become one of South Africa’s most well-known strategists. He started his career in 1994 at the stockbroking company, Huysamer Stals (later ABN Amro). He joined SMK Securities in 1997, (later became BoE Personal Stockbrokers) and was later appointed as director and branch manager. In 2001 he co-founded Contego Asset Management and managed the company as CEO up to March 2014, after which he joined PSG Wealth Old Oak. Schalk has also become a regular household name with investors, with his reports being published in many of the national press. He completed his MBA in 2008.

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