Over $50 billion has flowed into bank savings accounts in the last month, with another $30 billion going into bond funds.  Rather than income, “Safety” is currently the most important criteria for investors at this time per the TrimTabs report.

What you guessed on gold is true: Over the past month $2.2 billion left the SPDR Gold Shares (NYSE: GLD) ETF.  TrimTabs also pointed out that another $800 million has flowed out of the healthcare ETF called the Health Care Select Sector SPDR (NYSE: XLV).  When you consider that the Gold ETF is worth over $70 billion it might not matter so much, but the healthcare ETF has a current value of only about $4.4 billion per Yahoo! Finance data.  The iShares FTSE China 25 Index Fund (NYSE: FXI) was also said to lose the same as the healthcare ETF, and its market cap is listed as about $6.3 billion.

While money has continued to flow out of U.S. equity mutual funds, it is a bit interesting that the biggest inflow over the last month was in the SPDR S&P 500 (NYSE: SPY) with a $5.9 billion inflow.  Its market cap is about $86 billion as of now.  Charles Biderman noted that it was those inflows which “surely supported the S&P 500’s 6% pop in price.”

Another gainer was the $800 million inflows into the tech ETF via the Technology Select Sector SPDR (NYSE: XLK).  The market cap today is about $7.45 billion, but it is interesting that investors went into this one just in time for so many technology leaders to issue earnings warnings even though the time measured showed a 3% rise in that one.

iShares MSCI EAFE Index (NYSE: EFA) rose 3.3% in the time tracked and it saw an inflow of about $700 million in new funds versus its market cap of $36.3 billion.  This is effectively the international equity large cap index.

Biderman expects that new funds will continue to head into bond funds and savings accounts, but he noted that January is traditionally one of the biggest months for new inflows into equity mutual funds. He said, “As a result of more money chasing less new shares, the S&P 500 usually has gone up not only during January but most of the time right up until tax time in April.”

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JON C. OGG

24/7 Wall St. has focused on the ratings with a “positive” outlook from Standard & Poor’s, Moody’s and/or Fitch with a bias towards nations that investors can easily invest in via ADR shares, closed-end funds, and exchange-traded funds (ETFs). The featured nations that may be upgraded in 2012 are Brazil, Chile, China (with Hong Kong), Indonesia, Peru, Russia, South Korea, and Turkey.

Read: Nations Set For Credit Ratings Beyond Upgrades, Beyond The Euro Crisis

There is another slew of countries for which S&P has a “positive” outlook stance: Azerbaijan, Bolivia, Ecuador, Honduras, Latvia, Panama, and Sri Lanka. Unfortunately, these nations are almost impossible for Americans to invest in due to their size, the small number of public companies, and a lack of ETFs or mutual funds covering them.

The 24/7 Wall St. list is presented alphabetically and features relevant ratings. Also included are economic details and important developments to consider. Lastly, we have provided a list of the key closed-end funds, ETFs, and ADRs specific to each nation. Population estimates and purchasing power parity GDP for 2010 were taken from the CIA World Factbook.

All you have to do is look at the exchange-traded funds and closed-end which track the emerging markets and the BRIC nations (and those surrounding the BRICs).  Ugly is not quite the right description and we will explain more after showing just how bad the carnage is.  Greece is no emerging market, but it is on the path to default faster than emerging markets used to default.

The ETFs for the broad emerging markets is not a good signal for their equity markets.  The revolutions of early 2011 did not help, nor did the food inflation, but the economic slowing is taking a hit here left and right.  iShares MSCI Emerging Markets Index (NYSE: EEM) closed down 2.1% at $34.36 and the 52-week trading range is $34.29 to $50.43 (52-week low was Monday).  Vanguard Emerging Markets Stock ETF (NYSE: VWO) closed down 1.75% at $35.20 and the 52-week trading range is $35.13 to $50.92 (52-week low was Monday). 

We have included the most active ETF chart on each from Stockcharts.com at the end of this report.  The data on the BRICs is almost shocking…

BRAZIL

Brazil may have energy independence and the Olympics headed its way, but the implosion there has been massive.  The BOVESPA lost 2.9% of its value on Monday and let’s just say that its high-flyers are now grounded due to more than just weather.  It seems that minerals and forestry are not going to generate cash, just like it missed out on royalties from the term “Brazilian” in personal grooming. 

iShares MSCI Brazil Index (NYSE: EWZ) closed down 2.1% at $50.89 and the 52-week trading range is $50.71 to $81.77 (52-week low was Monday).  Market Vectors Brazil Small-Cap ETF (NYSE: BRF) closed down 3.15% at $37.96 and the 52-week trading range is $37.73 to $63.78 (52-week low was Monday).  iShares MSCI Chile Investable Market Index (NYSE: ECH) closed down 3.8% at $51.16 and the 52-week trading range is $50.92 to $80.38 (52-week low was Monday).  Aberdeen Chile Fund, Inc. (NYSE: CH) closed down 4.9%  at $13.45 and the 52-week trading range is $13.37 to $26.56 (52-week low was Monday).

If you invest in companies with high exposure to China, this might matter.  If you invest in key ETFs like iShares FTSE/Xinhua China 25 Index (NYSE: FXI), SPDR S&P China (NYSE: GXC), and Guggenheim China Real Estate (NYSE: TAO) or if you prefer closed-end funds like The China Fund, Inc. (NYSE: CHN) or Templeton Dragon Fund Inc. (NYSE: TDF) then this really matters.  Keep in mind that Jim Chanos has been bearish on China for some time.  The problem is that with things slowing elsewhere the issues at hand could be coming to a real head.  These funds and ETFs are generally down about 25% from year highs and most are closer to their lows of the last year.

Chanos recently spoke to Carol Massar on Bloomberg TV in this video.

On the debt issue… “The Chinese government’s balance sheet directly does not have a lot of debt. The state-owned enterprises of the local governments and all the other ancillary borrowing vehicles have lots of debt and its growing at a very fast rate. The assumption is that the state stands behind all this debt. We see that the debt in China, implicitly backed by the Chinese government, probably has gone from about 100% of GDP to about 200% of GDP recently. Those are numbers that are staggering. Those are European kind of numbers if not worse.”

The property bubble… “I think that will be the surprise going into this year, and into 2012 – that it is not so strong. The property market is hitting the wall right now and things are decelerating. The CEO of Komatsu said last week that he is having trouble getting paid for his excavator sales in China. Developers are being squeezed. They’re turning to the black market for lending, this shadow banking system that is growing by leaps and bounds like everything in China.

“Regulators over there are really trying to get their hands around the problem. In the meantime, local governments have every incentive to just keep the game going. So they will continue with these projects, continuing to borrow as the central government tries to rein it in.”

What Chanos is shorting… “We are short Chinese banks, the property developers, commodity companies that sell into China, anything related to property there is still a short.”  Oddly enough, Melco Crown Entertainment Ltd. (NASDAQ: MPEL) might be an indirect winner as Chanos is long the Macau casinos which are growing at a faster rate even than the property developers.

Chanos also outlined an IMF downgrade to China’s growth he outlined tha the write-offs make China’s 9% growth really about zero.

Chanos has been shorting China for some time and a recent CNBC video shows more on the matter.  Oddly enough, in August the Asian sector funds netted in a half-billion dollars in inflows.

JON C. OGG

A recent article from Bloomberg highlights the central issue.  And that is, many of these loans are “backed by collateral that is overvalued, may be hard to sell and, in some cases, doesn’t exist.” If this sounds familiar, think “Lehman” back in 2008.  Virtually all of China’s major banks are holding this paper, and many US ETFs and funds hold stock in these banks. One analyst cited by Bloomberg assumes that as much as $900 billion or so will not be repaid.

We’ve taken a look at some ETFs and mutual funds that hold shares in major Chinese banks. These funds include iShares FTSE China 25 Index Fund (NYSE: FXI), SPDR S&P China ETF (NYSE: GXC), PowerShares Golden Dragon Halter USX China ETF (NYSE: PGJ), Matthews China Investor (MCHFX), Fidelity Advisor China Region A (FHKAX), and Templeton China World A (TCWAX). All data on the funds is taken from Morningstar.

The iShares FTSE China 25 Index Fund (NYSE: FXI) holds 100% of its $6.7 billion in assets in Chinese equities. Just over 50% of the fund’s holdings are in financials, with more than half that invested in China Construction Bank, Industrial and Commercial Bank of China, Bank of China, Ltd., and Ping An Insurance Group, all Hong Kong-traded equities. The fund holds no real estate stocks. The ETF gets a 2-star rating from Morningstar.

The SPDR S&P China ETF (NYSE: GXC) holds more than 99% of its $772 million in assets in Chinese equities, and about 27% in financials. Its investments. Two-thirds of these holdings are in the same three banks, with China Life Insurance Co. Ltd. replacing Ping An. The fund holds about 3.8% of assets in real estate stocks. The ETF holds a 3-star rating from Morningstar.

The PowerShares Golden Dragon Halter USX China ETF (NYSE: PGJ) holds about 97% of total assets of $370 million in Chinese equities, but only about 5% in financials. Only China Life is included in its top ten holdings at 4.4% of assets. The fund holds less than 1% of assets in real estate stocks. The ETF holds a 2-star rating from Morningstar.

The Matthews China Investor (MCHFX) tracks the MSCI China Index and holds 100% of its $2.8 billion total assets in Chinese equities. About 18% are invested in financials, approximately half the exposure to the financial sector as the Index itself. Only Ping An is included in the fund’s top ten holdings. The fund’s largest investment sector is the consumer discretionary sector, at nearly 27% of assets, more than 4 times the Index holdings. Real estate holdings total about 4.75% of assets. The fund holds a 5-star rating from Morningstar.

The Fidelity Advisor China Region A (FHKAX) holds nearly 98% of its $2 billion total assets in Chinese equities. Financials make up about 30% of the holdings, with the three large banks accounting for almost 10% of holdings. The fund holds about 7.5% of its assets in real estate stocks. The fund holds a 3-star rating from Morningstar.

The Templeton China World A (TCWAX) holds about 99% of its total assets of $1.2 billion in Chinese equities. About 12.5% of holdings are financials and about 3.7% are real estate stocks. About 6.4% of holdings are shares in Bank of China and China Construction Bank. The fund holds a 5-star rating from Morningstar.

The three ETFs we’ve noted have done no better than stay flat since the beginning of the year. Of the mutual funds only TCWAX is showing a gain for the year.

Accounting issues and bad loans are not new to China. In 2003, when China Life issued shares on the NYSE, the company admitted accounting irregularities totaling $650 million. In the same year China’s biggest banks held an estimated $500 billion in bad loans, most of which the government covered in a massive recapitalization program. Even then the big problem was soaring real estate prices.

The difference was the real estate in question. In 2003, the boom in property was occurring in Shanghai and Beijing. Now, it has moved out to the sticks into cities few people outside of China have ever heard of.

It is pretty unlikely that the Chinese government will let its biggest banks fail. But to rescue them could put the brakes on China’s economic growth. The country’s financial, consumer, and real estate sectors could all suffer significant damage, with the effects rippling through the entire economy.

What happened in the US following the Lehman implosion is on the brink of happening in China. When (not if) it does, the best the country can hope for is that the government has taken the proper steps to ensure a soft landing. So far, there’s not a lot of evidence for that.

Paul Ausick

Other Chinese-focused ETFs getting a beating today are the SPDR S&P China ETF (NYSE: GXC) and the Guggenheim China Small Cap ETF (NYSE: HAO). Even a fund that includes all the BRICs, the iShares MSCI BRIC Index (NYSE: BKF) is losing ground.

Bloomberg is reporting that net outflows from FXI so far this year total $961 million.  The outflow tracks a decline in the forward P/E ratio of the Shanghai Composite Index, which has dropped to 11.6, its lowest level since November 2008.

Tighter monetary policy, including increased bank reserve ratio requirements and higher interest rates, have caused valuations on Shanghai stocks to fall. The funny thing about the drop in FXI is that the fund holds no shares in any Shanghai-traded stock, instead preferring Hong Kong and New York listings. The GXC fund also holds only US- or Hong Kong-listed stocks.

Year-to-date, FXI is down less than -2%, while EWZ is down nearly -7%. GXC is up about 2.5%, HAO is down almost -6%, and is down more than -2.5%.

Both FXI and GXC hold stocks in several state-owned or state-controlled companies. Banks play a large role in the holdings of both funds, with China Construction Bank, Industrial and Commercial Bank of China, and Bank of China all represented in the top ten holdings of both funds.

The top two holdings in both EWZ and BKF are Petrobras and Vale — oil and mining. The fund flows into Brazilian funds are likely tracking investors’ interests in commodities. Brazilian banks are important in EWZ’s top holdings, but don’t figure at all in BKF’s top ten.

The other odd thing about fund flows into Brazil is that the country is also fighting inflation and hot money inflows. The Brazilian currency recently set a 12-month high vs. the US dollar and the inflation rate in Brazil is expected to rise to about 6.3% in 2011 and could rise another 5.2% in 2012. Interest rates in Brazil are now above 12%.

Rising interest rates in China are sending money out of the country. Brazil’s numbers are at least as bad as China’s, yet money is flowing toward Brazil and away from China. Go figure.

Paul Ausick

It really was not that long ago that Goldman Sachs reversed a bullish position in oil and other commodities.  But now that oil has pulled back, a strategy call from the commodities team has now raised its target on oil to $120 and higher by year-end and into 2012 for Brent Crude.  Another Goldman Sachs strategist is now looking for a slowdown of China’s GDP growth this year and next with 9.4% GDP growth in 2011 rather than a prior 10% target.  For 2012, it looks like Goldman trimmed the growth to 9.2% from about 9.5% expected previously. 

What is interesting is that the GDP call noted a sharper slowdown in industrial production in China and that is its growth lifeblood.  Goldman Sachs also noted that inflation is not dropping as fast as previously hoped, which may only mean more bank and economic tightening from central planners and that means slower growth.  We aren’t going to spend too much time on their call since some of the inferences fly directly against each other.

What is hard to imagine is how commodities will rise this much more and putting this much price pressure on goods if the firm is also cutting China expectations.  How much of the world growth is tied to China?  That is an opinion of course which does have varying answers.  Investors and readers need to recall that India is being almost equally aggressive when it comes to putting on the inflationary brakes even while it acknowledges that the actions will slow economic growth.  Cutting expectations in China is almost equal to cutting growth rates in India. 

The reality is that you can actually have prices rise, even if growth rates either slow or if they contract.  We did not invent the term ‘stagflation’ and it is used for a reason.  If both India and China are really going to see lower growth, then it would seem plausible that they will be consumer that much less in commodities and that means that commodity demand will be that much less pressured. 

Anyhow, these two calls can actually co-exist regardless of how opposite they sound and despite the point that one strategist team is likely to be very wrong here.  If the dollar has a significant recovery over time, that is not a certain outcome of a bear market in stocks even though stocks have been reacting to the currency markets any time there is a large move. 

Maybe today was an instance where Goldman Sachs truly was operating behind a Chinese Wall, no pun intended.  From an outsider’s viewpoint it sounds more like a situation lost in translation.

United States Brent Oil (NYSE: BNO) is up almost 1% at $74.11 today while stocks are down by only 0.1% at 12,365 on the DJIA.  iShares FTSE China 25 Index Fund (NYSE: FXI) is actually up 0.4% at $43.11 today.  These moves almost seem counterintuitive.

JON C. OGG

When you come in after a night’s sleep and read about surprise rate hikes, chances are you would generally think that it would be treated as a financial governor.  If that has been the case, you wouldn’t know it just looking at broader Chinese equity exchange-traded products.  Some of these are actually up so far today and they are all still within striking distance of 52-week highs.

iShares FTSE China 25 Index Fund (NYSE: FXI) is down only 0.3% at $46.18 in late-afternoon trading and the 52-week trading range is $36.24 to $47.99.

SPDR S&P China (NYSE: GXC) is actually up by a few cents at $82.89 in late-afternoon trading and the 52-week trading range is $44.00 to $84.88.

Another fund is up even more today in the Guggenheim China Small Cap (NYSE: HAO).  Its shares are up 0.6% at $30.08 and its 52-week trading range is $22.20 to $33.57.

The Guggenheim China All-Cap (NYSE: YAO) ETF is up 0.3% at $29.51 and the 52-week range is $20.00 to $30.40.

If you saw the reaction so far against how it has treated these key ETFs which follow Chinese stocks, and keep in mind that there is almost no currency fluctuation with China, then maybe it is time to go ahead and have Uncle Ben (Bernanke) get off this zero-rate policy here in the United States.

JON C. OGG

Apple Inc. (NASDAQ: AAPL) is back in the health focus as Steve Jobs sent a memo to employees saying that he is taking a second medical leave of absence in two years so that he can focus on his health.  Be advised, Frankfurt trading in Apple is generally quite thin but Frankfurt trading on Monday had Apple shares down about 6.7%.  If that were to hold in the U.S. on Tuesday then we’d be sitting just above $325 all over again.

BP Plc (NYSE: BP) rose 2% in London trading on Monday after it signed a ROSNEFT share exchange pact that allows it to get access into Russian oil.  BP made our own “Best Big Oil Stock for 2011″ but we would caution that if the Monday gain holds that BP’s ADR shares will be back above $50.00 for the first time since May after the Deepwater Horizon disaster.

E-Commerce China Dangdang Inc. (NASDAQ: DANG) is one where the plot is thickening over hot Chinese IPOs for US ADRs.  The quiet period is about to end and a blogging post from China Dangdang’s CEO criticized Morgan Stanley for under-pricing its IPO.  AT $33.86 on Friday, the post-IPO range has been $22.57 to $36.40 after its 17 million shares sold at $16..00 per share after an initial price target range of $11 to $13 per share.

This looks like it was on reactions to China taking more steps to strengthen the ties between the countries.  China has agreed to allow Taiwan to participate in the WHO ruling body and announced a large investment in the country according to the WSJ.

Shares of this ETF were up 12% at $9.81 and the 52-week trading range is $6.42 to $17.50.  More importantly, we saw a whopping 72+ million shares trade hands.  It is unknown if that is a record or not, but that is over half of its entire float if the numbers are accurate.  A super-active day was 20 million shares in the past year.

To see if this excitement was happening elsewhere, we looked at related ETF’s and closed-end funds.  The The Taiwan Fund, Inc. (NYSE: TWN) closed-end fund rose almost 8% to $10.91 today; its 52-week trading range is $7.25 to $19.90.  The Taiwan Greater China Fund (NYSE: TFC) closed-end fund was up 10% at $4.50; its 52-week trading range is $2.81 to $7.71.

iShares FTSE/Xinhua China 25 Index (NYSE: FXI) is the ETF for the mainland FTSE/Xinhua China 25 index.   Its shares rose 4.6% to $31.96 and the 52-week range is $19.35 to $55.00.

JON C. OGG