International equities continue to improve, with notable appreciation seen in Japan, South Korea, and China.
International equities are having a banner year. The iShares MSCI ACWI ex US ETF (ACWX) is currently up over 28% in 2025 (through 10/29). If that was the final return for the year, it would mark the best annual return for the fund since 2009 (33%). We are also seeing ACWX outpacing the SPDR S&P 500 ETF Trust by nearly 11%. If we end the year at that mark, it would be the largest annual spread favoring ACWX since 2003. Of course, we could see a lot of change over the final two months of the year. Domestic equities typically see strong returns toward the end of the year, potentially due to return chasing during years of positive performance. Furthermore, we still see international equities sitting in the second position in our DALI asset class rankings. Domestic equities remain in first due to their long-term leadership over most of the past decade. Foreign stocks have been strong, just not strong enough to knock off US stocks, or at least not yet.
Many of the most recent improvements for international equities have come from Asia. This can be seen on the Asset Class Group Scores page, which classifies all ETFs and mutual funds into at least one of 134 different groups, then sorts those groups by the average fund scores of their respective constituents. The top 20 groups by average score include 10 international equity-focused groups. Four out of the top six groups are specifically focused on Asia. Japan takes the top spot, followed by China in third, then Super Pacific and Pacific Basin in fifth and sixth, respectively. The strength from Japan, South Korea, and China match up with the countries in focus during President Trump’s recent trip to Asia, but we have seen consistent strength from those regions long before Air Force One left the US.
Japan has been one of the most consistent areas for international equities since April. The iShares MSCI Japan ETF (EWJ) has rattled off three consecutive buy signals on its default chart and just notched a new all-time high two days ago with a bullish catapult completion at $84. The fund carries a 4.74 fund score and is less than one-box away from giving an RS buy signal against the SPXEWI for the first time since 2008. Even with the recent breakout, EWJ remains in an actionable position with a weekly overbought/oversold (OBOS) reading in the 40s, highlighting a potential buying opportunity. Initial support can be seen at $79.
South Korea has seen extreme appreciation over the last several days, with the iShares MSCI South Korea ETF (EWY) gaining over 20% in the past 30 days to eclipse a 90% gain year-to-date. This rapid price rise has left EWY in a heavily overbought position, with a weekly OBOS reading north of 180%. Those looking to add focused exposure to South Korea may be best served waiting for a pullback or normalization in the trading band.
China has seen a very consistent technical picture over the past few months. This can be seen by the KraneShares CSI China Internet ETF (KWEB), which has held a fund score north of 4.00 since July, and currently has a near-perfect score of 5.73. We saw KWEB give an RS buy signal against SPXEWI last October, and it reversed back up into a column of Xs against the market proxy in August, showing a continuation of near-term relative strength. The default chart of KWEB gave five consecutive buy signals before retracting from multi-year highs earlier this month to give a sell signal. While a sell signal is never a great thing, the first sell signal in a strong uptrend is often indicative of a pullback rather than long-term weakness. The fund has since consolidated right at the middle of its trading band near $40. The weight of the technical evidence remains favorable in the long-term and seems to just be showing near-term consolidation. This could offer a more opportune entry point for those that have been waiting to add long exposure during the recent ascent. Initial support can be seen at $38.50 with further support seen just below at $37.50.
