Emerging Markets Outperform U.S. Equities Thanks to Latin America, China

NEW YORK (TheStreet) -- Emerging market equities have outperformed U.S. indexes the past few months thanks to growth in Latin America -- particularly Brazil -- and China.

The chart below shows iShares MSCI Emerging Markets (EEM) leading U.S. indexes: SPDR S&P 500 (SPY), PowerShares QQQ (QQQ), SPDR Dow Jones Industrial Average (DIA), iShares Russell 2000 Index (IWM) since March.

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EEM Chart
EEM data by YCharts

Weakness has persisted in Russian equities, represented by index Market Vectors Russia ETF (RSX), due to geopolitical concerns, but strength in China and Brazil has compensated for such weakness.

Last week, Chinese equities, represented by iShares China Large-Cap (FXI), rose after economic growth and industrial production outperformed estimates.

Economic growth showed an annual gain of 7.5% in the second quarter against estimates of only a 7.4% rise. Similarly, industrial production grew by 9.2%, compared with an 8.8% rise the previous month.

HSBC Holdings  (HSBCupgraded its growth forecast for China, citing that the strong recovery was largely driven by government policies. State-owned bank lending picked up strongly, while fiscal spending grew by almost 25% in both May and June, said the report.

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