Best and Worst ETFs Of The Week Amid China A-Share Plunge

The SPDR S&P 500 ETF (SPY) managed to notch a solid gain of over 1 percent this week as investors cheered the patient stance of the Federal Reserve.  It appears likely that the first rate hike won’t materialize until the later half of 2015 at the earliest.  In addition, the hope of a last minute deal to avert a sovereign default by Greece seemed to calm investors as well.

While the U.S. markets were relatively calm this week, stocks in several overseas countries felt a snapback effect as prices became stretched to extreme levels.  

The following ETFs represent a sample of the best- and worst-performing funds over the last five trading sessions.

BEST: India Small Cap Stocks

For the last two consecutive weeks, small cap stocks in India fell to the bottom of our rankings as sellers pushed these markets to 52-week lows.  Nevertheless, the Market Vectors India Small Cap ETF (SCIF) and EGShares India Small Cap ETF (SCIN) managed to reverse those fortunes and closed 5 percent higher this week.

Both of these ETFs track a diversified basket of small publicly traded companies domiciled in India and managed to distance themselves from the recent lows.  However, both funds have more work to do in order to restore confidence that this bounce is not just a short-term phenomenon.

WORST: China Small Cap A-Shares

The China A share market has been red hot this year as foreign investor demand has spiked and new investment accounts from mainland Chinese citizens have been opened at a record pace.

Despite this rapid expansion of eligible investors, the China market is susceptible to declines just like any other.  The ChinaAMC SME-ChiNext ETF (CNXT) proved this by falling more than 16 percent this week.

CNXT provides exposure to the 100 largest and most liquid stocks on the Small and Medium Enterprise Board of the Shenzhen stock exchange.  Prior to this recent decline, CNXT had hit highs of as much as 130 percent in 2015.

It should come as no surprise that stocks that experience such a vertical ascent will ultimately be susceptible to steep declines as well.