The market’s reaction to the Brexit vote among emerging market stocks has been substantial, although it’s been under control, at least compared to the S&P and other major indexes. Just an hour from today’s close, the iShares MSCI Emerging Markets ETF (EEM) is down by just 1.5%, compared to a 2% drop in the S&P.
In addition, the ADRs in our portfolio, while they are being hit by the general decline in the market, are generally staying within their recent trading ranges. We even have a couple of stocks that are either resisting the general downtrend or actually advancing. Our Cabot Emerging Markets Timer is emphatically negative, however, which is a signal to take defensive action.
Accordingly, we’re going to sell our position in Seaspan (SSW), a stock that we’ve had in the portfolio for four full years, enjoying its impressive dividends through many market moves. But we can’t ignore the stock’s drop through 14, coming as it does after a prolonged down move from 19.5 in March. We will sell tomorrow and hold the cash.
We will watch the action of the markets and our stocks closely, and will send additional Hotlines as necessary.
Sell: Seaspan (SSW).