ETFs Riding High After Earnings – GREK, QQQC, SOCL
The bulk of second quarter earnings are in. According to CNBC, 72% of the companies reporting have beat the consensus estimate for EPS and 56% beat the consensus estimate for revenue.
Not surprisingly, we’ve seen the S&P 500 soar to record highs as investors digested these better than expected earnings.
But US stocks aren’t the only stocks on the upswing. In fact, some the best performing ETFs over the last four weeks don’t hold any US stocks at all!
Let’s take a closer look at the three top performing ETFs over the last four weeks…
Global X FTSE Greece 20 ETF (GREK)
GREK has been on a roll lately. Its 19% gain over the last four weeks makes it the top performing non-leveraged and non-inverse ETF.
The rally comes on the heels of a dramatic 37% drop from mid-May to mid-June. Even after the recent rally, this volatile ETF is still 20% below its 52-week high.
What’s behind GREK’s dramatic reversal?
To put it simply, investors are bottom-fishing in cheap Greek stocks.
They’re hoping the fledgling economic recovery in Europe will bring improvement to the downtrodden Greek economy.
But the reality is Greece is a mess. Their government debt is ballooning, unemployment is rampant, and political instability is mainstay. That makes any gains in Greek stocks tenuous at best.
Nevertheless, the mere fact that Greece hasn’t gone belly up at this point is a positive. Investors that are bold enough to buy right now could be handsomely rewarded if and when the Greek economy rebounds.
Global X NASDAQ China Technology ETF (QQQC)
As the name suggest, QQQC is attempting to be the Chinese version of the popular PowerShares Q’s (QQQ). And the wannabe QQQC’s 17% surge over the last four weeks is outperforming the Q’s 2.5% gain by a wide margin.
Why is QQQC on the upswing?
I found it surprising to see a Chinese ETF among the top performers.
Lately, there’s been nothing but bad news about China. Economic growth is slowing. The shadow banking system is destabilizing the financial system. The real estate market is in a massive bubble. And that’s just to name a few…
However, Chinese technology stocks seem to have avoided the negative sentiment running rapid throughout the rest of the Chinese economy.
In fact, sales of computers, tablets, and smartphones are expected to surge this year and for years to come. And the Chinese websites and search engines are expected to see growth US companies can only dream of these days.
Clearly, investors that have looked beyond the troubling Chinese economic data have found big rewards from Chinese tech stocks recently.
Global X Social Media Index ETF (SOCL)
SOCL is up 15% since 2nd quarter earnings season began. The gains pushed the social media ETF to its highest levels in its short existence.
This specialized ETF tracks the equity performance of the largest and most liquid companies involved in the social media industry. They include companies that provide social networking, file sharing, and other web-based media applications.
It’s no secret why SOCL is soaring…
Advertising on social media is hitting its stride. Companies like Facebook (FB), LinkedIn (LNKD), and even Groupon (GRPN) saw revenue and earnings beat estimates last quarter.
It’s great to see social media stocks live up to the hype and fanfare many of the companies came with during their IPO.
Savvy investors who saw through the short term challenges they faced with the transition to mobile are now reaping the rewards. And we’ll likely see social media companies continue to grow like gangbusters in the second half of the year.
Here’s the upshot…
The three top performing ETFs came from three very different areas – Greek stocks, Chinese Technology, and Social Media. Yet, they all came from the same ETF provider – Global X. They’re clearly one ETF provider that’s getting it right. With this type of performance, their entire lineup of innovative ETFs are deserving of closer inspection.
Good Investing,
Corey Williams
Category: ETFs, Foreign Market ETFs, Sector ETFs
