In October, value countries have continued to underperform the market and have been a significant drag on country selection. Meanwhile, Latin America took a huge step back as Brazil was down -19.22% on the month, showing a significant turn in what had been several months of positive momentum. Even so, the model remains split on Latin America overall: Brazil and Mexico are both in the top 5, while Peru and Chile are both in the bottom 5.
Notable Moves to the Upside…
- Russia… jumped 13 spots and is now back in the top 10 countries. Russia still looks most attractive from a valuation perspective, but improving risk and momentum is what moved them up in the rankings. From a currency perspective, the Russian Ruble is the most attractive in the model.
- Israel… climbed 9 spots and is currently ranked 5th overall. Israel has had improving momentum and is the 4th best performing country on the year. Fundamentals are the main issue in Israel where earnings growth has been slowing.
Notable Moves to the Downside…
- China… dropped 9 spots and is now ranked 10th overall. Momentum has slowed and risks have increased. Downside volatility has increased in China by over 6% during the last 30 days, while the average country has been relatively flat.
- Taiwan… fell 10 spots in the October rankings and is now ranked 17th overall. Most of this move came from slowing momentum. Over the last three months, Taiwan has underperformed the average country by over 5.5%.