24/7 Wall St.

Inflation is often crippling in economies, but so-called hyperinflation is far worse. 24/7 Wall St. recently identified 11 key emerging market nations suffering serious inflation. In most cases this is not technically hyperinflation. Hyperinflation is just one of those real risks to most emerging market nations. Note though that hyperinflation is defined differently by different economists. Those suffering from double-digit price gains in food and energy likely would disagree handily with formal economist definitions.

The good news is that some of the emerging market panic of the summer is abating. The bad news is that much of the gain seems tied to promises made long before a real economic recovery can be declared or is evidenced in the economic reports.

We decided to take a look at six emerging market exchange-traded funds (ETFs), five of which are very nation specific, where the recent share price recovery may signal that the worst has passed.

The emerging markets are still in a state of flux, and it would be negligent not to point out that these recoveries do not come without risk. As noted, many of the improvements seem to be based on trading bounces and on future promises rather than on true a recovery as seen in the actual economic reports.

Of our 11 nations under focus, we focused on the actively traded and country-specific ETFs by and large. These nations have suffered from the effects of inflation, and their economic growth is coming at rates that are in all cases well under each local economy’s potential.

iShares MSCI Emerging Markets (NYSEMKT: EEM) is the king of emerging market ETFs, and it is up another 1% on Monday to $40.45, against a 52-week range of $36.16 to $45.33. Keep in mind that this key emerging markets ETF was less than $37.50 at the end of August. This one screens out as dominated by China, Hong Kong and South Korea, but the reality is that it has exposure to all parts of the emerging market economic world. We generally feel that this ETF is too broad to measure any one or group of very specific economies. That being said, we also have to concede that the largest institutional investors and retail investors use this ETF as the benchmark for emerging market exposure. Its average daily volume of 72 million shares, worth nearly 43 billion in daily volume, speaks for itself.

iShares MSCI Brazil Capped (NYSEMKT: EWZ) is very active, with some 18 million shares trading on an average day. Shares were up 1.5% at $46.00 in early Monday trading, and its 52-week range is $40.68 to $58.08. Based on that 52-week high, you can immediately tell that Brazil is living far under its growth potential. That has been the case for two years now, and the birth of the nation on the international front with getting to host the next Summer Olympics has not helped. This Brazil ETF now literally has rallied 10% from the lows just five trading days ago. Brazil’s inflation rate most recently was measured at 6.3%, with gross domestic product (GDP) growth running at less than 2%. New promises have been made by its central bank to bolster the economy and to keep its real currency from further appreciating to where the nation is uncompetitive.

Market Vectors Russia ETF (NYSEMKT: RSX) is rather actively traded, with nearly 4 million shares per day. After a 1% gain to $27.57, its 52-week range is $23.94 to $31.38. The Russian ETF bottomed out back in June, but it actually has been range-bound and is appearing to attempt a breakout to what had been resistance at $27.50. Russia’s inflation is 6.5%, yet its growth is down to a paltry 1.2%. Vladimir Putin is back in firm control and the term stagflation is unfortunately most descriptive of the economy now. Russia has vast resources and has all the ambitions of becoming a financial superpower. A 15% bounce off of its 52-week low should start to stand out as substantial.

WisdomTree India Earnings (NYSEMKT: EPI) also has been in recovery mode, now that India has a new well-respected central banking head. After a 1% gain to $15.08 as of Monday morning, its 52-week range is $12.99 to $20.50. We would also point out how quickly the recovery has been, as its 52-week low was just on August 28. India’s inflation is simply too high at 9.6%. Having a GDP growth of less than 5% is far under its potential, and frankly its infrastructure may be as large of a drag to its growth as its policies have been. India is unfortunately at the mercy of being dependent on foreign oil prices as well.

iShares MSCI Turkey Invest Market Index (NYSEMKT: TUR) also perhaps is closely tied to Middle East concerns, while being at the backdoor of Europe with its ambitions of joining in as a full trading partner in the euro. Its shares were up 4% at $51.75 in late morning trading on Monday, but its 52-week range is $47.27 to $77.40. Recent summer deadly protests did severe harm to the nation on its global economic status as a great emerging market. It is still surprising that there has only been a 10% bounce from the bottom, when you consider how far it fell. Turkey’s inflation was almost 9%, while its GDP growth has run at about 3%. This is way below its growth potential, and the growth figures from the disruption this past summer likely will make its economic growth look even worse.

iShares MSCI Indonesia (NYSEMKT: EIDO) is the last of our at-risk yet recovering emerging market ETFs. Most people forget that the nation’s 250 million or so in population weathered the financial crisis from 2007 to 2009 rather well, but rising local prices have been a severe risk here. With a 4% gain in late Monday morning trading to $23.90, its 52-week range is $21.06 to $36.48. By the looks of it, that 10% recovery could have much more upside if the nation can deliver on its promises. Inflation has run close to 9% here, and GDP growth of 5.8% is still not as strong its real economic potential.