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Russia is still giving emerging markets a bad reputation, China continues to make investors nervous with its slowing economic activity, and the U.S. Federal Reserve is again signalling that the days of extraordinary stimulus are coming to an end.

These developments aren't good news for emerging markets – but the exchange-traded funds that track them are rallying anyway.

The iShares MSCI emerging markets ETF (which I own) has risen more than 10 per cent since early February, clawing back considerable ground after falling 15 per cent since October amid fears of a regional financial crisis that would repeat the carnage of 1997. The ETF is now at its highest level since the start of the year.

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The Guggenheim BRIC ETF, which tracks the markets of Brazil, Russia, India and China, has rebounded 8.7 per cent over the past two weeks, after slumping more than 20 per cent since October.

Bespoke Investment Group believes the technical backdrop is encouraging. They noted that the ETFs "burst through a downtrend," with Brazil's market (or at least the iShares MSCI Brazil capped ETF) leading the way.

"Brazil was the canary in the coal mine, and the five straight up days for the Ibovespa Index [last week] were a bullish sign," Bespoke said on its blog. "EWZ [the Brazil ETF ticker] broke its downtrend in the middle of last week, and now EEM [the broad emerging markets ETF] and EEB [BRIC ETF] are confirming the move upwards after a tentative move above resistance yesterday."

Beyond the technicals, is there anything to celebrate here? Not really, but rather than wait for the good news to appear, investors are acting on the belief that things can't get much worse.

Russia is building forces on the Ukrainian border and facing Western economic sanctions that could affect Russian companies.

China's economy is disappointing expectations so much that observers are now mulling the need for government stimulus. As Reuters reported Friday, "China's exports unexpectedly tumbled last month and other economic data and business sentiment surveys have consistently undershot expectations, suggesting the economy's first-quarter performance was the weakest in five years."

Meanwhile, Turkey is now best known for shutting down Twitter access in the country, which is hardly an encouraging sign of progress.

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Still, there are a few reasons to ignore the troubling backdrop and invest in emerging market stocks anyway.

For one, they're cheap. The MSCI emerging markets index has a price-to-earnings ratio of just 11.7. That compares to a multiple of 17-times earnings for the S&P 500 and 19-times earnings for Canada's S&P/TSX composite index.

For another, you'll find some awfully big multinationals in the index, including Samsung Electronics Co. Ltd., Hyundai Motor Co., Ambev SA, PetroChina Co. Ltd., Vale SA and Cemex SAB. These companies reflect the fact that emerging market stocks aren't limited to their home bases, but are becoming big plays on the global economy.

And finally, while emerging market stocks sold off earlier this year on some scary what-if scenarios – encouraging investors to dump their mutual funds – the scenarios aren't materializing yet.

Russia's relations with the West are deteriorating, but there's no violence; China is plodding along without an economic blow-up; and several central banks in emerging markets have raised their key interest rates aggressively in response to currency freefalls.

None of this can be characterized as good news. But it's good enough for an early rally.

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