Emerging ETF Volatility Plunges to Decade Low on Global Growth

A measure of price swings in the exchange-traded fund tracking developing-nation shares slipped to the lowest level in at least 10 years as economic data from the U.S. and China showed signs of improvement.

Fifty-day volatility on the iShares MSCI Emerging Markets Index dropped to 11.59, the lowest level since at least January 2003, when Bloomberg started compiling the data. The ETF slipped 0.2 percent to $44.71 in New York today, declining for the first time in three days.

China’s economic growth accelerated for the first time in two years last quarter amid government efforts to revive demand, data released Jan. 18 showed. In the U.S., initial jobless claims for the week ended Jan. 12 fell to a five-year low, pointing to further improvement in the labor market, while housing starts climbed 12.1 percent in December. European Central Bank President Mario Draghi said today that the “darkest clouds” over the euro area have subsided.

“You’ve got increased global risk appetite on the back of better Chinese news flow, better-than-expected U.S. data and the fact that Europe appears to be stabilizing,” Alec Young, a global equity strategist at S&P Capital IQ, said by phone in New York. “When there’s more nervousness around you see more volatility, but it’s been nice and steady recently.”

To contact the reporter on this story: Victoria Stilwell in New York at vstilwell1@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net

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