4Q 2017 Review: International ETF

Author: Bill Witherell, Ph.D., Post Date: December 26, 2017

The strong advance in international (global ex-US) equity markets this year slowed down in the final quarter as advanced-economy markets consolidated their substantial gains and some emerging markets gave back part of their earlier advances. Latin American markets were hit by weakness in commodity markets, weakness in the Brazilian economy, and Mexican concerns about its trade relations with the US. In Asian economies tech stocks followed the weakness in US tech stocks, but Asian economies continue to be the global growth leaders. As a whole, international markets are expected to close out 2017 with a 2% gain for the quarter and a 23% gain for the year. The gain for the European and Asian advanced economies in 2017 looks likely to be a little less, 21%. The annual gain for emerging markets is going to be greater, around 33% if South Korea is included as an emerging market or around 26% if South Korea is now considered to be an advanced economy.

The broad rally in global equity markets this year was based on an increasingly synchronized recovery in most economies, with many reaching full-employment performance. Global GDP growth this year looks likely to have reached a strong 3.7% pace, and a similar advance is projected for 2018. Growth in the advanced economies was about 2.2% while the advance in the emerging markets as a group was 4.7%, more than double the advanced economies’ growth. China’s and India’s economies continued to lead, with gains of 6.8% and 6.7%, respectively.

We are ending the year with our International Portfolio fully invested with overweights of emerging markets and, regionally, of Asia. Among advanced-economy markets we continue our overweight of Japan and of smaller-cap stocks. The robust outlook for the global economy accompanied with low interest rates leads us to think that the global bull market in equities will continue in 2018.

Bill Witherell, Ph.D.
Chief Global Economist & Portfolio Manager
Email | Bio

cumber map
Cumberland Advisors® is registered with the SEC under the Investment Advisers Act of 1940. All information contained herein is for informational purposes only and does not constitute a solicitation or offer to sell securities or investment advisory services. Such an offer can only be made in the states where Cumberland Advisors is either registered or is a Notice Filer or where an exemption from such registration or filing is available. New accounts will not be accepted unless and until all local regulations have been satisfied. This presentation does not purport to be a complete description of our performance or investment services. Please feel free to forward our commentaries (with proper attribution) to others who may be interested. It is not our intention to state or imply in any manner that past results and profitability is an indication of future performance. All material presented is compiled from sources believed to be reliable. However, accuracy cannot be guaranteed.