EEM Stock Recent News

Emerging-market stocks are coming off a tough quarter after facing down a triple threat of rising Treasury yields, a stronger U.S. dollar, and a lackluster recovery in China's economy and markets.

By Hyun Kang, Research Analyst There was a lot of optimism for emerging markets (EM) equities heading into 2023. The long-awaited reopening of the Chinese economy was expected to bolster the country's equities and the EM asset class more broadly.

During LSEG Lipper's fund-flows week that ended October 4, 2023, investors were overall net purchasers of fund assets for the first week in three, adding a net $32.9 billion. The Bloomberg U.S. Aggregate Bond Total Return Index logged its third straight weekly loss. Exchange-traded equity funds recorded $4.7 billion in weekly net inflows, marking the first weekly inflow in three.

Wall Street has been upbeat in the year-to-date frame as current stress in the market has been outweighed by superb gains in the first half.

As China stocks continue to fall, investors may want to ensure their emerging markets exposure diversifies away from the country. China stocks have been pressured by a weakening yuan and waning investor optimism toward the world's second-largest economy.

What in the world is it going to take to break U.S. dominance and for emerging markets to run again in a sustained way? For well over a decade, emerging market stocks have been what I often call “volatile cash.

The Hartford Multifactor Emerging Markets ETF (ROAM) stands out for its outperformance over category peers such as EEM. ROAM is unique in that it is underpinned by a multifactor strategy and targets lower volatility securities.

iShares MSCI Emerging Markets ETF is heavily exposed to China, Korea, and Taiwan, all of which face major geopolitical risks. The risks associated with these assets, including potential permanent impairment and demographic challenges, make the EEM ETF unappealing at its current valuation. You can buy solid businesses for the same multiple as EEM with almost none of the existential risks. It is not an ETF we would consider.

We focus on the iShares MSCI Emerging Markets ETF as a broad way to trade emerging markets after a risk-off period. The iShares MSCI Emerging Markets ETF offers investors exposure to over 800 emerging market stocks and potential long-term growth. EEM's top holdings include Taiwan Semiconductor Manufacturing, Tencent Holdings, and Samsung Electronics.

EEM invests in emerging markets in order to take advantage of fast-growing economies. The fund is top-heavy and focused heavily in a few countries. It's been underperforming for a while and there might be a better alternative.