Effect of Oil on Global emerging markets-India, China, Turkey

Today oil rose above $142 on concerns that Israel would attack Iran by the end of this year. This was followed by a report from International Energy Agency citing that supply will not be able to keep with demand.

With the second half over now, the global indexes paint an awfully bad picture. Just look at the performances of Turkey, China, India. These three countries are leading the world market on the downside. China, India and Turkey are net Huge importers of oil. As oil prices skyrocketed, these countries immediately felt the pain.

In India, oil imports account for 5% of GDP. The Indian market has been riled with upsurge in oil prices. Also, check the value of rupee, it contains to deteriorate to extreme levels. Today the rupee broke the important psychological exchange rate level of Rs 43 for 1 US dollar. If it can sustain above the Rs43 level, the rupee can easily depreciate to Rs46 level.

But look at the stock markets in Brazil, Russia. Check the performance of the Brazilian ETF EWZ. Brazil is a huge exporter of commodities, helping the local economy.

Australian dollar is another example of commodity net exporter, it broke through to a new 25-year high.

I believe the oil prices will continue to surge into the $150-170 level. As long as oil prices continue to urge to this level, focus your trading/investments only in oil related companies.
Completely avoid the financials and anything that is remotely connected to the consumer. Higher oil prices translate to higher cost of goods which translates to lesser demand.

Good Luck !!