The South Africa ETF - the new long-term trend or just some fluctuations?

2015-06-25 13:39:33

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iShares MSCI South Africa ETF (EZA) has risen from $62.5 on mid-Wednesday to over $67 at the beginning of today's session. Considering its beta value, EZA has grown almost 7% above S&P 500:

http://www.trendsinvesting.com/symbol/EZA#id15/10/relative/basic

Is it a long-term trend or just some fluctuations?

After soaring from $20 in late 2008 to almost $70 at the end of 2010, EZA began to fluctuate between $50 and $70 during the next 3 years. Since Q2 2014 EZA has generally been fluctuating between $60 and $72:

http://www.trendsinvesting.com/symbol/EZA#eod/75000/absolute/basic

http://www.trendsinvesting.com/symbol/EZA#eod/500/absolute/basic

In the relative terms, EZA has constantly been falling. It has declined 55% below S&P in 5 years, 45% in 3 years and 14% in a year:

http://www.trendsinvesting.com/symbol/EZA#eod/1250/relative/basic

http://www.trendsinvesting.com/symbol/EZA#eod/250/relative/basic

How is the South African economy performing? This year's GDP growth will probably exceed 2% only a little and the next year's growth is not expected to be better. Meanwhile, the inflation is expected to reach 4.9% this year and 6,1% in the next year.

There is also a 26% unemployment rate, the higher and higher public debt, and electricity shortages from the under-invested national utility corporation Eskom. The energy prices are going to rise, which will push up the inflation even more. The interest rates are expected to be increased already in July and then further in the 4th quarter.

The macroeconomic data does not encourage investors to believe that this one-week uptrend is something more than just a fluctuation during the long-term stagnation in the absolute value and the long-term downtrend relative to S&P.

 

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