Key Highlights

  • 4.16 percent is Brazil's weight in iShares MSCI Emerging Markets ETF (NYSEARCA:EEM) at October 2, 2026, so a 12.5 percent Brazil rally adds only about 0.5 percentage point by simple arithmetic.
  • 12.5 percent was the October 5 gain for iShares MSCI Brazil ETF (NYSEARCA:EWZ), to USD 42.98, after the first round vote, with the real up about 4 percent to near 5.00 per US dollar.
  • 28.99 percent Taiwan, 21.87 percent South Korea and 19.33 percent China make up about 70 percent of iShares MSCI Emerging Markets ETF (NYSEARCA:EEM), with technology at 44.30 percent of holdings.
  • 94.70 percent is the year to date return shown for iShares MSCI South Korea ETF (NYSEARCA:EWY), whose net asset value was USD 191.66 on October 5, with an equity beta of 1.92.

Brazil's Jump, in Proportion

Brazil's first round vote on October 4 put Flavio Bolsonaro at about 47 percent against President Lula at about 45 percent, and iShares MSCI Brazil ETF (NYSEARCA:EWZ) rose 12.5 percent to USD 42.98 on October 5, above its 52 week high of USD 41.66 as of October 2. The real gained about 4 percent. The fund, with USD 8.97 billion of assets and 46 holdings, is 36.14 percent financials and 16.59 percent energy. But iShares MSCI Emerging Markets ETF (NYSEARCA:EEM), with USD 31.4 billion of assets and 1,186 holdings, had only 4.16 percent in Brazil. Multiplying the weight by the move gives about 0.5 percentage point, simple arithmetic that ignores weight drift. Its net asset value was USD 67.81 on October 2, with a year to date return of 25.75 percent.

What Really Drives the Index

Emerging market performance now rests on Asian technology. Per the issuer, Taiwan is 28.99 percent of iShares MSCI Emerging Markets ETF (NYSEARCA:EEM), South Korea 21.87 percent, China 19.33 percent and India 10.44 percent, and information technology is 44.30 percent of holdings. That links the fund to the AI hardware cycle. Foxconn's reported third quarter revenue of 3.03 trillion NT dollars, up about 47 percent, is one example from Taiwan. Korea is even more concentrated: iShares MSCI South Korea ETF (NYSEARCA:EWY) has 52.07 percent in technology, a 94.70 percent year to date return and a three year standard deviation of 43.13 percent, so it can swing sharply in either direction.

Risks and What to Watch

Brazil's first round did not produce a winner, so a runoff is expected, with October 25 the usual date, to be confirmed by the electoral authority. A tight race can reverse the real and the stocks quickly, as the 12.5 percent gain shows. Higher US yields are a wider risk: the 10-year Treasury at 5.31 percent competes with emerging market assets and can strengthen the dollar. The euro reached a 17-month low, a sign of currency stress elsewhere. Concentration is another risk for iShares MSCI Emerging Markets ETF (NYSEARCA:EEM), since the 0.72 percent expense ratio buys heavy Asian technology exposure. Watch the FOMC minutes at 2:00 p.m. ET on October 7, Taiwan and Korea technology earnings, and Brazil runoff polls.

Where Things Stand

The broad emerging market ETF most insulated from Brazil is iShares MSCI Emerging Markets ETF (NYSEARCA:EEM), since Brazil is only 4.16 percent of it. Brazilian single country funds took the headline move, while Taiwan, South Korea and China decide the index. The next catalysts are the Brazil runoff, US rate expectations and Asian chip demand. This is analysis of published fund data, not a recommendation.